Binance Sues RedotPay for $473M Over User Poaching Ahead of IPO

Woofun AI reports that Binance has initiated aggressive legal proceedings against its former strategic partner, RedotPay, demanding $472.8 million in damages. The exchange alleges that the crypto payment unicorn secretly poached over 470,000 users from the Binance Card ecosystem while simultaneously mishandling $304 million in customer funds. This high-stakes litigation targets RedotPay’s three co-founders—Michael Gao, Chan Wa Choi, and Yao Chao—at a critical juncture, just as the company prepares to file for an initial public offering in the United States.

The move signals a definitive end to the cooperative relationship that once defined the market dynamics between the two entities, replacing partnership with direct adversarial competition. The core of the dispute centers on alleged breaches of contract and asset segregation protocols, which Binance claims constitute a fraudulent scheme designed to siphon value from its user base to inflate RedotPay’s valuation ahead of its public listing.

The legal offensive was launched on August 5, involving multiple Binance-affiliated entities operating across different jurisdictions. Nest Trading, DistributedTechnologies, and Chaintecs Consulting Singapore filed a petition in Hong Kong courts against the three named co-founders, alleging violations of agreements signed between the parties last year. This multi-front strategy aims to maximize pressure on RedotPay’s leadership team by leveraging legal systems in both Hong Kong and Singapore.

In addition to the Hong Kong filing, Chaintecs, another entity linked to Binance, initiated a separate lawsuit in Singapore against RedotPay’s corporate affiliates. A hearing for the Singaporean case is scheduled for this Friday, August 9, indicating an accelerated legal timeline intended to disrupt RedotPay’s IPO preparations. The simultaneous actions in these two major financial hubs suggest a coordinated effort to freeze assets or secure injunctions that could materially impact the startup’s operational continuity and investor confidence during its pre-IPO phase.

Both parties have maintained rigid public stances regarding the unfolding litigation, refusing to engage in public reconciliation. A Binance spokesperson declined to provide specific comments on the ongoing legal battles but stated that the company would utilize all available legal channels to "seek justice" if necessary. This vague but firm response underscores Binance’s willingness to pursue maximum compensation rather than settle quietly. RedotPay responded by asserting that it would "respond through proper legal procedures," emphasizing its commitment to an active defense. The startup further claimed that the lawsuits would not affect its daily operations, attempting to project stability to its user base and potential investors.

However, the intensity of Binance’s allegations, particularly regarding fund misuse, poses a significant reputational risk that could overshadow RedotPay’s operational metrics. The lack of dialogue between the two sides indicates that the relationship has deteriorated beyond repair, with both entities preparing for a protracted legal battle that could span years.

The methodology behind Binance’s $472.8 million compensation claim relies on a specific calculation of lifetime value (LTV) for the allegedly poached users. Binance estimates an LTV of $925 per user who was lured away from its platform, multiplying this figure by the number of affected users to determine the total loss. LTV is a standard metric in traditional finance and internet industries, representing the net revenue a customer is expected to generate over their entire relationship with the company. Using this metric to quantify the value of lost customers is a widely accepted practice in business damages claims, allowing plaintiffs to project future income streams as current losses.

Based on this calculation, dividing $472.8 million by $925 yields approximately 510,000 users, which aligns closely with Binance’s claim of "over 470,000" users. This discrepancy suggests that Binance may be accounting for additional indirect losses or using a conservative estimate of the user count to strengthen its legal position. The argument posits that these users, who migrated from Binance Card to RedotPay, directly contributed to RedotPay’s inflated valuation, thereby linking the alleged misconduct to the startup’s financial success.

Beyond the compensation claim, Binance cited another critical figure to support its allegations: approximately $304 million in user funds obtained from Binance Pay during the partnership period. This amount reflects the actual volume of funds that flowed between the two parties, pointing directly to the issue of customer asset segregation. Binance accuses RedotPay of violating segregation rules, labeling the behavior as part of a "fraudulent scheme" designed to misuse client assets. This allegation is particularly severe, as it touches on core regulatory requirements for financial institutions and payment processors.

Whether this constitutes a regulatory violation related to fund management remains to be determined by relevant authorities and the court, but the mere accusation can trigger scrutiny from regulators in multiple jurisdictions. The dispute is primarily framed as a contract violation, but the implications extend into the realm of financial compliance, potentially jeopardizing RedotPay’s licenses and partnerships. The $304 million figure serves as tangible evidence of the scale of interaction between the two companies, providing a concrete basis for Binance’s claims of misconduct.

Woofun AI data shows that RedotPay’s financial history reveals a rapid ascent in the crypto payment sector, marked by significant funding rounds and a soaring valuation. Founded in 2023, the company raised $40 million in a Series A round in March 2025, followed by a $47 million strategic financing round in September, and a $107 million Series B round in December. By the end of 2025, RedotPay had secured a total of $197 million in funding from prominent investors including Accel, Blockchain Capital, Circle Ventures, Coinbase Ventures, and Galaxy Ventures. This impressive capital raise propelled the company’s valuation beyond $1 billion, earning it unicorn status.

Notably, Coinbase Ventures, a shareholder in RedotPay, is a direct competitor to Binance, adding a layer of strategic complexity to the funding landscape. RedotPay is now preparing to file for an IPO in the U.S., targeting a valuation of $4 billion. The timing of the lawsuit, just before this public listing, suggests that Binance aims to disrupt the IPO process or force a reduction in the valuation by highlighting legal and operational risks. The presence of Coinbase Ventures as an investor may also influence the dynamics of the dispute, given the competitive rivalry between Coinbase and Binance.

In terms of business performance, RedotPay has demonstrated strong growth metrics, which it has used to attract investors and justify its high valuation. RedotPay’s annual payment volume exceeded $10 billion in December 2025, doubling from the previous year. Its revenue also doubled to $158 million during the same period. The company itself claims that its current annual payment volume is $14 billion, with annual revenue of $180 million and over 8 million users.

Additionally, RedotPay is currently the top-ranked crypto card by transaction volume, with a total volume of $5.8 billion. These figures highlight the company’s market dominance in the crypto payment space, particularly in Asia.

However, the $472.8 million claim from Binance represents roughly 2.6 times RedotPay’s annual revenue of $180 million. Even if the final settlement is reduced by the court, such a substantial lawsuit poses a serious threat to a company preparing for an IPO. The outcome will likely need to be disclosed in its prospectus, potentially deterring investors or leading to a lower valuation. The contrast between RedotPay’s impressive growth and the massive legal liability underscores the fragility of its financial position.

Behind the high growth rate lies significant turmoil within RedotPay’s management team, raising questions about its operational stability. At least five executives left the company within less than a year of joining, and the company proceeded with its IPO preparations without a CFO. RedotPay’s compliance officer changed hands twice in one year, indicating instability in a critical role responsible for regulatory adherence. Jonathan Tsang, who served as the company’s legal director since 2024, posted on LinkedIn that he resigned on July 21. This departure is particularly significant in the context of the lawsuit, as Binance accuses RedotPay of compliance issues such as poor asset segregation.

The frequent changes in key leadership roles suggest internal conflicts or dissatisfaction with the company’s direction. RedotPay is controlled by Rabbit7 Holding, registered in the British Virgin Islands in 2023. The name was chosen by the seven co-founders, inspired by the rabbit theme of that year, symbolizing "running fast like a rabbit." One of the founders is former banker Michael Gao. Two other key figures—Dawei Yuan, a major shareholder, and co-founder Troy Yao (possibly the same as Yao Chao, a defendant in the lawsuit)—both come from Huobi, now known as HTX.

However, only three of them are mentioned in Binance’s lawsuit, leaving the reasons for their exclusion unclear.

The timeline of the partnership breakdown reveals a series of escalating conflicts between Binance and RedotPay. Initially, the relationship was one of mutual assistance, with RedotPay providing Visa-enabled crypto cards after Binance discontinued its European crypto cards in December 2023. RedotPay gained access to Binance’s large user base, allowing users to convert stablecoins into fiat currency for spending.

However, submitted documents show that RedotPay first reached an agreement with a Binance-affiliated company in November 2023. That agreement broke down less than six months later due to accusations that Binance funds were being used to pre-top up RedotPay’s cards. In March 2025, the two parties reached a new agreement, ensuring that Binance funds would be kept separate from other funds. Starting in March 2026, Binance claimed to have discovered again that RedotPay was using Binance funds improperly to top up cards. On April 3, 2026, Binance disabled RedotPay’s Binance Pay functionality, leading to the formal lawsuit just four months later. This sequence of events highlights a pattern of trust erosion and contractual violations, culminating in the current legal battle.

Binance has since rebuilt its own card business, joining Mastercard’s global crypto partnership program in March 2026. Cards are now being launched in markets such as Brazil and the Asia-Pacific region, directly competing with RedotPay’s offerings. RedotPay, which took advantage of Binance’s suspension to fill the gap, now faces a returning Binance that has shifted from a complementary partner to a direct competitor. With this lawsuit, Binance is not only seeking resolution to past issues but also sending a message to a rival that has benefited from its success and is now preparing for an IPO. The outcome of this case will likely be disclosed in RedotPay’s prospectus, affecting its valuation and investor perception. The shift from partnership to rivalry marks a significant change in the crypto payment landscape, with Binance reasserting its dominance and RedotPay facing unprecedented legal and financial challenges.