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A unit of California-based venture capital firm Sequoia Capital is suing Binance, the world’s largest cryptocurrency exchange by trading volume, following the disintegration of negotiations the two parties, according to a report by Bloomberg.

The lawsuit against Binance was filed in a Hong Kong court by Sequoia Capital, and the court’s filings were dated March 26 and April 24. Moreover, the documents revealed the details of the sour negations between the two parties and the process of valuation of the exchange by the venture capital firm.

The court filings detailed that the CEO of Binance entered into negotiations with Sequoia Capital regarding an investment in the exchange in August of last year. The deal would have given the venture capital firm nearly 11 percent stake of the exchange, which, at the time, was valued at about $80 million.

However, after months of negotiations, the deal fell apart in December, after the meteoric rise of Bitcoin and other cryptocurrencies.

The court document showed that on December 14, Binance informed Sequoia Capital that its existing shareholders are against the deal, as they believed that the exchange was undervalued by the VC firm. Meanwhile, another venture capital firm – IDG Capital – approached Binance and its investment offer was significantly higher than Sequoia Capital – $400 million and $1 billion consecutively with two rounds of funding along with a higher valuation.

Bloomberg pointed out that the current issue is whether Binance has violated any exclusivity of the deal with Sequoia Capital by entering into talks with IDG Capital. Though the parties were settling the dispute with arbitration, the filling of a lawsuit made the issue public.

Moreover, the Hong Kong court ordered a temporary injunction to Binance, which bars the exchange from entering into negotiation with any institutional investors until further notice.

Dominance of Binance

Zhao Changpeng founded Binance in 2017, which did not even have an annual anniversary yet. However, the nine-month-old exchange is dominating the cryptocurrency market with its wide range of trading options. According to CoinMarketCap.com, the exchange settled $3.9 billion worth of cryptocurrency trading orders in last 24 hours, higher than any of its leading competitors.

Moreover, the exchange’s success has made its founder a billionaire, with a net worth of around $2 billion, and he was also featured on the cover of Forbes magazine.

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