Binance Sues RedotPay Founders for $472M Ahead of US IPO

Woofun AI reports that Binance has initiated high-stakes legal proceedings against RedotPay and its three co-founders, seeking $472.8 million in damages just as the payment firm prepares for a United States initial public offering. The litigation, filed in both the Singapore Supreme Court and a Hong Kong court, names Gao Zhangpeng, Chan Wa Choi, and Yao Chao as defendants, marking a rare aggressive move by the exchange against a former partner. This strategic timing coincides with RedotPay’s valuation discussions nearing $4 billion, creating immediate pressure on its listing trajectory.

The core of the legal action centers on allegations of a "fraudulent scheme" involving the migration of more than 470,000 former Binance Card users to RedotPay. Binance claims that funds from Binance Pay were not properly isolated as agreed but were instead used to top up RedotPay cards, violating the terms of their cooperation. The exchange calculated its claim based on a lifetime value of $925 per user, resulting in the total demand of $472.8 million. A procedural hearing at the Supreme Court of Singapore, scheduled for 11:30 a.m., was expected to conclude in just 15 minutes, while documents from a Hong Kong court obtained by Bloomberg forty-eight hours prior detailed the specific accusations against the three entities affiliated with Binance.

The origins of this conflict trace back to 2023, a pivotal year for Binance marked by significant regulatory and operational challenges. In June, the CSRC sued Binance and Changpeng Zhao, initiating a period of intense scrutiny. By July, Visa ceased issuing new Binance-branded cards in Europe, and in August, Mastercard announced the termination of its partnership with Binance Card, affecting users in South America. In October, Binance confirmed the discontinuation of its Visa debit card service in Europe, forcing a strategic pivot to Binance Pay as the primary alternative for cryptocurrency spending, despite the need for further operational refinement.

RedotPay emerged during this transitional period, established in Shenzhen and Hong Kong with its legal entity, Red Dot Technology Limited, registered in 2023. The company’s main product is a Visa card paired with a stablecoin wallet, allowing users to deposit USDT and BTC to make purchases, withdraw cash, or link to Apple Pay, with the system automatically liquidating crypto assets into fiat currency. Launched in August 2023 with physical cards released in October, the platform is known in Chinese-speaking communities as "Xiao Hong Ka." Behind RedotPay is Yuan Dawei, an early co-founder of Huobi who left in 2015 to found CoolWallet in Beijing in 2016, leveraging his deep roots in the Bitcoin community since 2010 to secure initial resources for the venture.

In its early stages, RedotPay operated with a minimal team and relied on partnerships for card issuance, initially working with Reap, a Hong Kong fintech company holding major Visa membership qualifications. Reap specialized in white-label card issuance and cross-border payments, effectively packaging the service as a corporate card issuance solution. An insider noted that the founders of RedotPay likely operated another company simultaneously, acting as a contractor to manage and promote Binance Pay’s payment services, with potential overlaps in actual controllers despite no direct equity connection between the entities. This structure allowed RedotPay to function with a tiny team and minimal user base during the summer of 2023.

Woofun AI data shows that the first cooperation agreement between an affiliate of Binance and RedotPay was signed in November 2023, establishing a mini-program within the Binance app where users could select RedotPay, enter an amount, and click "Pay with Binance Pay" to receive a top-up code. This process reduced top-up time from minutes to seconds, with fees set at 1% for Binance Pay and 1% for the RedotPay mini-program. The agreement also introduced Lightning Deposit, allowing Binance users to directly deposit USDT from their accounts into RedotPay, eliminating the costly customer acquisition phase of convincing strangers to download the app, register, and complete KYC procedures.

However, this arrangement broke down within less than six months, with disputes centering on the use of Binance Pay funds to top up prepaid RedotPay cards.

A second cooperation agreement was signed in March 2025, following RedotPay’s Series A funding, which clarified the rules for fund isolation. Under this agreement, funds from Binance could be used to exchange for fiat currency, transfer within the RedotPay app, or purchase RedotPay’s own products, but they could not directly become spendable balance on RedotPay cards and had to be separately labeled in the accounts. This distinction between account balance and card balance was critical, as card balance serves as the starting point for consumption relationships, allowing users to link to Apple Pay and make daily purchases. The agreement aimed to prevent Binance’s money from exiting the system as spendable balance, thereby protecting the revenue streams derived from exchange rate differences, transaction fees, and accumulated balances.

Despite the legal tensions, RedotPay’s fundraising pace accelerated, with a $40 million Series A round led by Lightspeed, HSG, and Galaxy Ventures announced in March 2025. In September, Coinbase Ventures added $47 million in strategic funding, pushing the company’s valuation above $1 billion and officially making it a unicorn. By December, Goodwater Capital led a $107 million Series B round, with participation from Pantera Capital, Blockchain Capital, and Circle Ventures, bringing the total raised within a year to $194 million. Financial metrics showed rapid growth, with over 6 million registered users across more than 100 markets as of November 2025, annual payment volumes exceeding $10 billion, and annual revenue surpassing $150 million, including 3 million new users acquired throughout the year.

Binance’s accusation that more than 470,000 former Binance Card users were directed to RedotPay highlights the alleged misconduct, with an insider suggesting that RedotPay’s earliest move was sending emails to Binance customers, directing them to the new platform. Binance discovered the problem in March 2026, finding that RedotPay was still allowing and encouraging the use of unisolated Binance Pay funds for prohibited purposes, leading Binance to stop providing support on April 3, citing the need to review merchant partners. Four months later, the lawsuit was filed in a Hong Kong court, while reports indicated in February 2026 that RedotPay was collaborating with JPMorgan, Goldman Sachs, and Jefferies to prepare for a New York listing, aiming to raise over $1 billion and achieve a valuation of over $4 billion, with an IPO potentially happening this year.

The settlement prospects for this dispute are significant, as the $472.8 million claim is roughly equivalent to RedotPay’s earnings over two and a half years, a figure designed to facilitate a resolution rather than force insolvency. For a payment company preparing for a U.S. listing, the last thing its prospectus should include is an endless cross-border lawsuit, which would raise questions from underwriters, investors, and regulators.

Paying a lump sum to reach a settlement and turning a "pending lawsuit" into a "resolved matter" is the fastest route to going public, especially given RedotPay’s internal challenges, including the loss of at least five executives in the past 12 months and the lack of a CFO despite approaching the listing deadline. This strategic legal maneuver underscores the high stakes involved in the stablecoin payment sector, where regulatory compliance and operational integrity are paramount for successful public listings.