Binance fighting with a Titan of venture capital. The essence of the conflict and the implications for exchange

Chanpen Zhao filed a lawsuit against Sequoia Capital China — China venture capital units of the company for compensation for damaged reputation. According to Zhao, investors falsely accused him of violating the exclusive agreement of stockholders ‘ equity.

According to the CEO of the largest crypto currency exchange in the world, venture capitalists unfairly impeded the financing Binance. In December 2017 Sequoia without notice Zhao has received a court injunction and subsequently used it [Zhao] as a plaintiff in the notice of arbitration in January 2018.

Three months later, Deputy judge of the Supreme court stated that “the use of the name of the plaintiff without prior notice is an abuse”. This allowed Zhao to overturn the injunction. In addition, Sequoia was obligated to indemnify Zhao 25 percent of the costs of the proceedings. Then Sequoia China paid $ 2.4 million and lost the case.

I had over a year to pay 779043 dollars, but these expenses were assumed by the losing party.

Missed opportunities

As Zhao explains, Sequoia got a restraining order against him at the end of 2017. Just when the influx of capital in cryptocurrency and blockchain startups reached historic highs. However, due to unfair litigation Binance missed a lot of deals with other venture capitalists, who were very interested in cryptocurrency exchange.

Market capitalization of crypto-currencies reached 815 billion in January 2018. Source: CoinMarketCap

Chanpen Zhao also blames Sequoia at the expense of his own reputation. According to him, due to “loopholes in the legal system” he could not publish the results of the meetings in April 2018. And so he had to file a counterclaim that the community learned the truth.

Due to legal loopholes are suffering startups

Chapter Binance sees in this incident a clue, which leads to a larger fraudulent scheme. He believes venture capitalists around the world engage in this practice toward startups and small companies. Most of the latter will not pull lawsuits due to funding constraints, which is barely enough to develop its own products. Zhao is confident that start-UPS can significantly reduce the dependence on venture capital financing and instead to organize a fundraiser based on the blockchain.

Similar lawsuits are too much of a distraction during startup. So many have no choice but to agree to the onerous conditions of major venture capitalists.

According to reports, the hearing scheduled for June 25 in Hong Kong, so the new data appears to the same date. And yet in our cryptodata there are still a lot of other useful information.

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