CZ Binance Comments on Sequoia Dispute and How His Legal Victory Came at a Price
CZ Binance took to Twitter today to share his side of the story with the Sequoia dispute and legal case, where his eventual victory was not without damage to his reputation and business.
Binance CEO Changpeng Zhao, or CZ Binance, has taken to Twitter in order to present his views on the dispute between his company and renowned venture capital firm Sequoia Capital.
December 2017 was an explosive time for crypto growth, but Binance, one of the leading cryptocurrency exchanges, was unable to leverage industry attention and popularity to raise funds for its Series A round.
This was because Sequoia Capital’s China branch obtained an injunction against Changpeng Zhao, preventing him from raising any funding on the grounds that he breached an exclusivity agreement.
However, by the end of 2018, Hong Kong courts and the arbitration tribunal dealing with the case judged that Sequoia’s injunction was an abuse of process and the claims made by the VC were without merit.
As per the award announced by the courts (pictured below), Sequoia, the Claimant, was ordered to pay Binance (the Respondent), its legal fees and costs amounting to USD 779,043.
Commenting on the case, Changpeng Zhao highlighted how he had to front $779k to cover his legal fees for a year, and even though the fees were reimbursed later, the amount was effectively blocked, and few entrepreneurs can afford such high costs.
“For most entrepreneurs, they will not be able to: front $779,000 to fight a lawsuit; secure additional funding for their startup given a pending lawsuit, even one that’s clearly without proper base and where the claimant will surely lose,”
he wrote before adding that fighting a legal battle is a major distraction while you are trying to run a startup and raise.
Finally, ending this Twitter thread, CZ gave new entrepreneurs a heads up about blockchain based fundraising, which does not come with the strings VCs typically attach with their money.