Binance Sues RedotPay for $472.8M Over Alleged Theft of 470,000 Users

Woofun AI reports that Binance has initiated aggressive legal proceedings against RedotPay, a leading crypto payment card provider, on the eve of its anticipated initial public offering. Entities affiliated with Binance filed lawsuits in Hong Kong targeting three co-founders—Gao Zhangpeng (Michael Gao), Yao Chao (Troy Yao), and Chan Wa Choi—and separate actions in Singapore against RedotPay’s associated corporate entities. The core allegation centers on the alleged diversion of over 470,000 users from Binance Card to RedotPay, a breach of partnership agreements that Binance claims caused significant financial harm.

A hearing for these matters is scheduled for this Friday, marking a critical juncture in the dispute between former strategic allies. RedotPay has publicly denied the accusations, stating its intention to defend itself vigorously against the claims. This litigation represents the first instance where a major cryptocurrency exchange has explicitly quantified and litigated the monetary value of individual crypto payment card users, bringing the economics of user acquisition into sharp focus.

The specific damages claimed by Binance total $472.8 million, a figure derived from the alleged loss of 470,000 users who were migrated from the Binance Card ecosystem to the RedotPay Card platform. According to the litigation documents, this user diversion was not incidental but the result of systematic violations of agreed-upon operational boundaries. The lawsuit highlights the tension between two competing card products: Binance Card and RedotPay Card. The hearing scheduled for this Friday will likely delve into the mechanics of how these users were transferred.

Binance argues that RedotPay exploited its access to Binance’s user base to fuel its own growth, effectively cannibalizing Binance’s retail payment market share. The $472.8 million figure is not merely a punitive measure but a calculated assessment of the lifetime value lost due to the alleged breach. This substantial claim underscores the high stakes involved in the crypto payment sector, where user retention directly translates to significant revenue streams through transaction fees and financial services.

RedotPay’s market position and financial scale provide context for the magnitude of Binance’s claims. The company currently boasts more than 8 million users, a user base that has enabled it to process an annual payment volume of $14 billion. With annual revenue reaching $180 million, RedotPay has established itself as a dominant player in the crypto payment card industry. On-chain data indicates that RedotPay holds over 50% of the market share, solidifying its status as the industry leader. The company’s rapid growth has been fueled by its ability to facilitate stablecoin transactions through issued bank cards, allowing users to spend crypto in the real world. RedotPay’s plan to pursue an IPO reflects its confidence in its business model and financial performance.

However, the lawsuit introduces significant uncertainty into its public listing plans. The valuation of RedotPay is closely tied to its user base and transaction volume, making the allegation of user diversion particularly damaging. If proven, the breach could undermine investor confidence and impact the company’s ability to raise capital at its target valuation.

The backgrounds of RedotPay’s founders and its early investors reveal a team with deep roots in both traditional finance and the cryptocurrency industry. CEO Gao Zhangpeng (Michael Gao) previously worked at major traditional financial institutions, including HSBC and DBS Bank, and was a key member of ChainUp. COO Yao Chao (Troy Yao) brings experience from Huobi, one of the earliest cryptocurrency exchanges. The third co-founder, Chan Wa Choi, maintains a lower public profile, with limited information available about his professional background. RedotPay was initially invested in and developed by Yuan Dawei, a veteran in the crypto space who began researching Bitcoin in 2010.

Yuan Dawei was one of the early co-founders of Huobi and the founder of KuCoin Wallet, and he has been involved in the operation of several popular tokens in recent years. This blend of traditional financial expertise and crypto-native experience shaped RedotPay’s strategy. The team adopted a typical Chinese Internet approach: aggressively seizing market share, achieving scale effects, and then monetizing through diversified financial services. This strategy has been instrumental in RedotPay’s rapid rise, but it has also led to conflicts with partners like Binance.

The origin of the partnership between Binance and RedotPay dates back to November 2023, when the two companies entered into a collaborative agreement. At that time, Binance partnered with RedotPay to open up its user base and payment network, aiming to expand its payment options to a wider range of retail merchants. In return, RedotPay helped Binance integrate its payment solutions into its platform. The initial agreement allowed Binance users to perform crypto-to-fiat conversions and in-app transfers on RedotPay’s platform.

However, the relationship deteriorated less than half a year after it began. In December 2023, Binance Card stopped serving users due to compliance pressures, creating a vacuum that RedotPay allegedly exploited. Binance discovered that RedotPay was allowing users to directly top up their RedotPay Card using funds from Binance Pay, a feature that was not part of the original agreement. This action effectively diverted Binance users and funds to RedotPay’s card product, undermining Binance’s payment ecosystem. The breach of trust led to the breakdown of their first partnership, setting the stage for future legal disputes.

Woofun AI data shows that in an attempt to resolve the issues, Binance and RedotPay signed a new agreement in March 2025. This second agreement included a strict "fund isolation" clause, requiring that Binance Pay funds be held separately and prohibiting their use for topping up RedotPay Card. The clause was designed to prevent the diversion of users and funds that had occurred in the previous partnership.

However, during an audit in March 2026, Binance found that RedotPay had violated this isolation requirement again. Binance Pay funds were flowing into RedotPay Card top-up channels without the required isolation, indicating a continued disregard for the agreed-upon boundaries. In response, Binance terminated the partnership in April, citing the repeated violations. The lawsuit alleges that over 470,000 users were diverted from Binance Card to RedotPay Card as a result of these breaches.

Furthermore, Binance claims that the partnership allowed RedotPay to obtain approximately $304 million in user funds from Binance Pay, highlighting the financial impact of the alleged misconduct. This sequence of events underscores the difficulty of maintaining trust and compliance in strategic partnerships within the crypto industry.

Binance’s renewed focus on user diversion from Binance Card is closely linked to the restart of its own card business. In October 2025, Binance Card resumed operations in Brazil, marking a significant step in its expansion strategy. This year, Binance further expanded its card services to some CIS regions and emerging markets such as Armenia. These expansions were driven by compliance pressures and the need to diversify its payment offerings. The restart of Binance Card indicates Binance’s commitment to reclaiming its position in the retail payment market.

However, the alleged diversion of users by RedotPay poses a threat to this strategy. If RedotPay continues to attract Binance users, it could hinder Binance’s efforts to grow its card business in new markets. The lawsuit is thus not just about past damages but also about protecting Binance’s future growth opportunities. The strategic context of the dispute highlights the competitive nature of the crypto payment sector, where user acquisition and retention are critical to success.

The valuation logic behind Binance’s $472.8 million claim is based on the lifetime value of each diverted user. According to litigation documents, Binance estimates that each of the 470,000 diverted users generates approximately $925 in lifetime value. This figure is not an immediate revenue amount but an estimate of the long-term value a user brings to the platform. For payment platforms, a user’s value comes from multiple sources, including transaction fees, payment income, accumulated funds, and other financial service revenues generated over time.

Binance views the diverted users not as ordinary registered users but as payment users with significant future value. The $925 lifetime value per user is a critical component of the damage calculation. It reflects Binance’s assessment of the economic impact of losing these users to a competitor. This valuation logic challenges the notion that user acquisition is a one-time cost, emphasizing instead the ongoing revenue potential of each user. The lawsuit thus serves as a precedent for how crypto exchanges might value and protect their user bases in future disputes.

Investor relations and funding history provide additional context for the dispute. In its Series A financing documents, RedotPay described its partnership with Binance as a way to "accelerate user acquisition." The documents specifically mentioned that users could directly deposit funds from Binance Pay to their RedotPay Card, a feature that Binance now alleges was a breach of contract. This description suggests that RedotPay leveraged its partnership with Binance to reduce customer acquisition costs, tapping into Binance’s massive user base and funds. If this functionality was indeed prohibited or restricted in the original agreement, then the "growth logic" presented by RedotPay to investors may be based on the very breach of contract alleged in the lawsuit.

Since 2023, RedotPay has completed three rounds of public financing, raising a total of approximately $194 million. Its investors include well-known traditional Web2 venture capitalists such as Sequoia Capital China, Archangel Ventures, and Lightspeed, as well as leading crypto-native funds such as Coinbase Ventures, Galaxy Ventures, Pantera Capital, Blockchain Capital, and Circle Ventures. The involvement of these prominent investors highlights the interest in RedotPay’s business model, but the lawsuit may raise questions about the sustainability of its growth strategy.

The IPO risks and executive turnover at RedotPay add further complexity to the situation. Reports indicate that RedotPay was preparing to go public in the U.S. with a target valuation of around $4 billion and was also trying to raise new funds.

However, the lawsuit with Binance is likely to cause significant trouble for its IPO and further financing. Major commercial disputes often attract attention from regulators and investors, especially when they involve issues such as user ownership, partnership agreements, and fund isolation. These issues are closely related to the core capabilities of fintech companies, including compliance and risk management. If the two sides cannot resolve the issue quickly or if the case escalates, it may affect investors’ confidence in RedotPay’s business stability and future growth prospects.

At the same time, RedotPay is facing internal management crises. Reports indicate that at least five executives left the company within the past year, with each serving for less than 12 months. Jonathan Tsang, the company’s legal director, resigned on July 21, 2026. For a fintech company preparing for an IPO, the stability of the management team, the strength of its compliance system, and the level of financial discipline all impact market confidence. The combination of legal disputes and executive turnover poses a significant challenge to RedotPay’s ability to proceed smoothly with its IPO.