LayerZero Labs Reaches Settlement with FTX Bankruptcy Estate After Two-Year Legal Battle

LayerZero Labs Reaches Settlement with FTX Bankruptcy Estate After Two-Year Legal Battle

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

“Ultimately, we recognized that this wasn’t a battle between us and FTX—one in which we firmly believe we were justified—but rather a conflict between us and the creditors, of which we are also one,” Pellegrino stated.

The legal dispute stemmed from a deal LayerZero Labs made with Alameda Research CEO Caroline Ellison just days before FTX declared bankruptcy. Under the agreement, Alameda sold back its 5% equity stake in LayerZero—valued at $150 million at the time—in exchange for LayerZero forgiving a $45 million loan it had extended to Alameda. The FTX estate later filed a lawsuit against LayerZero in 2023, arguing that these transactions occurred while Alameda was already insolvent, making them fraudulent and subject to reversal.

Additionally, another arrangement between the two companies involved Alameda agreeing to sell back 100 million Stargate (STG) tokens to LayerZero for $10 million, despite having originally purchased them for $25 million. However, this transaction was never completed.

When the lawsuit was initially filed, Pellegrino dismissed the allegations as “unsubstantiated claims,” asserting that LayerZero had made active efforts to resolve the situation regarding Alameda’s shares but had been ignored.

In his latest update, Pellegrino confirmed that LayerZero has now returned the original repurchase to the FTX estate.

“Glad to have fewer calls with lawyers and to fully focus on building,” he remarked.