Bryan Pellegrino, co-founder and CEO of LayerZero Labs, announced that his company has reached a settlement with the FTX bankruptcy estate, ending a prolonged legal dispute that began in late 2022.
The settlement resolves claims by the FTX estate, which sought over $21 million from LayerZero related to transactions made with Alameda Ventures before FTX's collapse. According to Pellegrino's statement on X (formerly Twitter), LayerZero spent "millions in legal fees" before reaching the agreement.
"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)," Pellegrino explained. He confirmed that the original repurchase amount has been returned to the estate.
The dispute stemmed from a 2022 deal where Alameda Ventures acquired a 5% stake in LayerZero for $70 million and purchased $25 million worth of Stargate Finance tokens. When FTX filed for bankruptcy, LayerZero attempted to buy back its equity stake in exchange for forgiving a $45 million loan to FTX.
The FTX estate filed suit against LayerZero in September 2023, claiming the company had "negotiated a fire-sale transaction" with former Alameda CEO Caroline Ellison during FTX's liquidity crisis. The lawsuit also addressed an uncompleted plan for LayerZero to repurchase Stargate tokens at a 60% discount.
This settlement adds to the ongoing resolution of FTX's bankruptcy proceedings. The estate's reorganization plan became effective on January 3, with smaller claimants expected to receive repayments within 60 days. The criminal cases related to FTX's collapse have concluded, though former CEO Sam Bankman-Fried is currently appealing his 25-year prison sentence.