LayerZero Labs Settles with FTX Bankruptcy Estate

LayerZero Labs has reached a settlement agreement with the FTX bankruptcy estate after two years of legal dispute, as announced by co-founder and CEO Bryan Pellegrino on the social media platform X.

Pellegrino stated, “Ultimately we decided this was not us vs FTX which is a fight we feel completely justified in, but it was us vs the creditors (which also we are one of).”

The conflict began when the FTX estate sued LayerZero Labs in 2023 regarding a deal made with Alameda Research CEO Caroline Ellison shortly before FTX filed for bankruptcy. The agreement involved Alameda selling back its 5% equity stake in LayerZero, valued at $150 million at the lawsuit’s initiation, in exchange for LayerZero forgiving a $45 million loan extended to Alameda. The FTX estate’s lawsuit contended that Alameda’s transactions with LayerZero occurred while Alameda was insolvent, making the transfers fraudulent and liable for reversal.

Another aspect of the dispute featured Alameda’s commitment to sell back 100 million Stargate (STG) tokens to LayerZero for $10 million, despite having paid $25 million originally. However, these transactions were not finalized.

On the day the FTX estate filed its lawsuit, Pellegrino countered the claims, labeling the suit as filled with “unsubstantiated claims” and indicating that LayerZero had made efforts to resolve the matter regarding the Alameda shares but had been ignored.

In his recent update, Pellegrino announced the return of the original repurchase to the FTX estate, expressing relief with, “Happy to have less calls with lawyers and full focus towards building.”