Currency Ann vs. Sequoia Capital: Zhao Changpeng sued the venture capital giant, demanding compensation for reputational losses, will hold a hearing to assess the loss

Zhao Changpeng (CZ), founder and CEO of Binance, will bring a subsidiary of Sequoia Capital to court, after Sequoia Capital’s allegations against him have been rejected by the court.


CZ claims that Sequoia Capital China has damaged his reputation and prevented him from raising funds with a favorable valuation for the currency, and hopes that the venture capital giant will compensate.

According to a document submitted by CoinDesk to the Hong Kong High Court on May 20th, CZ has submitted an application through his lawyer requesting a hearing and requesting a “brief assessment of the loss immediately”.

Based on the information provided on the court's website, CZ will hold a hearing on the case with SCC Venture VI on June 25, case number HCMP 2770/2017. SCC Venture VI is a company incorporated as a special purpose carrier of Sequoia Capital China.

Sequoia Capital received an injunction on December 27, 2017 prohibiting CZ from raising funds from other investors by March 1, 2018. CZ's application requires an investigation to determine if he "has suffered any losses and what caused the damage."

If it is determined that “any such damage has been suffered”, CZ asks Sequoia to pay the amount of the loss determined in the investigation. (He did not give a specific amount.)

CZ says in the new file:

"The injunction has caused me losses. I am entitled to reasonable compensation from Sequoia. In particular, 1. I have lost the opportunity to raise funds through increasingly rounds of financing with higher and higher valuations; 2. Damage to me. reputation."

As of press time, Sequoia Capital China has not responded to requests for comment.

Earlier, the Hong Kong International Arbitration Center issued a ruling in December 2018, dismissing all the allegations of Sequoia Capital against the currency. Sequoia Capital said that CZ violated the exclusive agreement when it negotiated A-round equity financing between Sequoia Capital and Coin.

"Program abuse"

The case began with Sequoia Capital unilaterally obtaining an December 2017 injunction without notifying CZ, and then submitting the arbitration notice as a plaintiff in January 2018.

Sequoia Capital accused CZ of violating exclusivity and spoke with IDG Capital when negotiating with Sequoia Capital for the first round of financing.

Three months later, after the hearing on April 11, 2018, a deputy judge of the High Court ruled on April 24 that "Redwood’s unilateral application for the application without notification to CZ was wrong." After that, there was no explanation or proof why it was not handled through the participation of both parties.

The judge said: "I agree that the use of a unilateral procedure without notice to the accused CZ is an abuse of the program. If the ban is not over, I will put it aside on this basis."

In the next few months, the parties continued arbitration in 2018 and submitted various evidence to a three-member arbitral tribunal of the Hong Kong International Arbitration Centre.

Based on the final decision of December 12, 2018, the court dismissed Sequoia Capital’s allegations of CZ’s violation of exclusivity on the basis that CZ’s negotiations with IDG Capital were actually for Series B financing after Series A financing.

The court stated in its decision that:

“The court found that the negotiations with IDG were not a “competitor deal” for A round of financing, but a B round of financing transactions that did not compete with Series A financing.”