Binance affiliates have filed a lawsuit against the founders of Hong Kong-based crypto payments firm RedotPay over the alleged diversion of hundreds of thousands of Binance customers and an alleged breach of contract.

 

In the lawsuit, Binance affiliates Nest Trading Ltd., Distributed Technologies Ltd., and Chaintecs Consulting Singapore Pte. accuse RedotPay cofounders Gao Zhangpeng, Chan Wa Choi, and Yao Chao of violating the terms of an agreement signed by both parties last year.

 

According to the filing, the two companies signed an agreement last year under which Binance said it received assurances that Binance Pay funds would be kept separate from RedotPay's own operations.

 

Under the agreement, Binance users could use RedotPay only for crypto-to-fiat conversions, in-app transfers, or the purchase of RedotPay branded products.

 

However, Binance now claims that RedotPay violated the agreement by allowing and encouraging Binance Pay funds to be used beyond the agreed terms, including to top up RedotPay cards. Binance alleges that this resulted in the diversion of more than 470,000 of its users to RedotPay's competing product, contributing to the company's increased valuation.

 

Estimating the lifetime value of each customer at $925, Binance is seeking about $472.8 million in damages for the more than 470,000 customers it alleges RedotPay diverted to its platform.

 

Responding to the lawsuit in a blog post published on its website, RedotPay said it was confident in its legal position and would vigorously defend itself against all claims. 

 

The lawsuit comes at a time when RedotPay has witnessed significant growth and is considering an initial public offering that could value the company at $4 billion.

 

The company also claims to have grown its user base by more than 33% to over 8 million users in the last six months and to have generated more than $180 million in revenue from an annualised payment volume exceeding $14 billion.