LayerZero Labs, a cross-chain protocol firm, has reached a settlement with the FTX estate concerning transactions from 2022 involving Alameda Ventures, the venture capital arm of Alameda Research. In a January 31 post on X (formerly Twitter), LayerZero co-founder and CEO Bryan Pellegrino announced that after incurring “millions in legal fees” and enduring two years of litigation, the company had settled with the FTX estate.
The dispute centered on allegations that LayerZero withdrew funds prior to FTX’s collapse in November 2022 and issues related to an equity stake in the protocol. FTX had been seeking over $21 million from LayerZero in the lawsuit.
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). Original repurchase has been returned to the estate.”
In 2022, Alameda Ventures agreed to acquire approximately a 5% stake in LayerZero, involving transactions where Alameda sent $70 million to LayerZero and purchased $25 million worth of STG tokens. Following FTX’s bankruptcy filing in November 2022, LayerZero sought to repurchase its equity by forgiving a $45 million loan to FTX. However, the FTX estate filed a lawsuit in September 2023, alleging that LayerZero “negotiated a fire-sale transaction” with then-Alameda CEO Caroline Ellison, exploiting the firm’s liquidity crisis.
Court documents also revealed that LayerZero intended to repurchase the STG tokens for $10 million in a separate deal—approximately 40% of their original price. However, Alameda never transferred the tokens, and no funds were exchanged in this regard.
Since declaring bankruptcy in 2022, FTX debtors have initiated multiple lawsuits against crypto companies associated with the defunct exchange, aiming to recover funds. While some cases are ongoing, the estate’s reorganization plan took effect on January 3, allowing many users with claims under $50,000 to be repaid within 60 days.
All criminal cases against FTX executives have concluded, with Ellison, former FTX CEO Sam Bankman-Fried, and former FTX Digital Markets co-CEO Ryan Salame currently serving prison sentences. Bankman-Fried is appealing his conviction and 25-year sentence.