Binance investor Weixing Chen sues

Early Binance investor sues claiming shares undervalued

Investor Weixing Chen claims the exchange is not offering a fair price for his shares

An early investor in crypto exchange Binance claims that the firm is undervaluing itself to pay out less for his shares.

A post on Tencent’s QQ Chinese social media channel reported on Sept. 2 that Weixing Chen claims that he purchased 5% to 10% of Binance’s shares in October 2017, when the firm was valued at $70 million. 

Chen claims that the firm is only willing to provide a valuation equivalent to its one-year profit—$500 million to $1 billion—which he believes is a gross undervaluation of the company. The report cites U.S. crypto exchange Coinbase and its 2018 valuation of $8 billion as data that backs this idea.

Furthermore, Chen also said that Binance investors did not obtain share confirmation for transfer purposes and do not receive dividends. According to him, Binance gave its shareholders “no rights, no entity, no statements, no dividends, no currency, no repurchase, no transfer rights.”

Chen is not attempting to sell his shares publicly but back to Binance. 

Chen claims that he has all the relevant documents including contracts, payment records and chat records. He said that he believes it will cost him millions in attorney fees to bring the lawsuit against Binance, but he is already preparing all the evidence to sue the company.

Binance did not respond to Modern Consensus’ request for comment by press time.

This is not the only litigation that Binance has been involved in. In April 2018 Binance’s CEO Changpeng Zhao saw venture capital firm Sequoia Capital initiate a lawsuit against him for allegedly breaching an exclusive investment agreement. In late May 2019, Zhao sued Sequoia Capital for reputational damages after the lawsuit against him was dismissed.

Lawsuits growing

The cryptocurrency industry grew out of proportion over the last few years, and where there are riches there are also people fighting to own them. This translates to lawsuits seeking increasingly large sums of money.

As Modern Consensus reported yesterday, Tezos paid $25 million to settle a class action lawsuit against it alleging that the initial coin offering that saw it raise $232 million in 2017 infringed securities regulation.

Then there is Ira Kleiman’s lawsuit against self-proclaimed Bitcoin creator Craig Wright. The brother of Wright’s late partner is seeking half of the $10 billion in BTC mined by the pseudonymous Satoshi Nakamoto at the beginning of the first blockchain, as well as half of the intellectual property of Bitcoin—despite most of the cryptocurrency industry arguing that Wright is lying about being Nakamoto.

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Adrian is a newswriter based out of Pisa, Italy. He's passionate about cryptocurrency, digital rights, IT, tech and futurology and likes to think about the future in a positive way.