LayerZero Settles FTX Dispute, Focuses on Growth
LayerZero Settles FTX Dispute, Refocuses on Growth
LayerZero Labs has resolved its protracted legal dispute with the FTX estate, concluding over two years of litigation and significant legal fees. This settlement allows LayerZero to fully concentrate on expanding its omnichain infrastructure and maintaining its leadership in blockchain interoperability.
Background: The FTX and LayerZero Dispute
The conflict stemmed from FTX Ventures’ participation in LayerZero’s $135 million funding round in March 2022. Alameda Research, FTX’s sister company, invested over $70 million, acquiring a 4.92% stake in LayerZero. Alameda also purchased $100 million worth of Stargate Finance (STG) tokens for $25 million and received a $45 million loan from LayerZero.
Following FTX’s collapse in November 2022, LayerZero attempted to recoup its investment by canceling the $45 million loan and repurchasing its stake from Alameda. This action, along with significant withdrawals in the months preceding FTX’s bankruptcy, prompted legal action from the FTX estate, which accused LayerZero of exploiting Alameda’s financial distress.
The FTX estate's filing stated: "LayerZero sought to capitalize on Alameda Research’s distressed financial position by demanding immediate repayment of its $45 million loan."
The lawsuit aimed to recover $21.37 million in funds withdrawn by LayerZero in the 90 days before FTX’s bankruptcy, as well as additional sums from former LayerZero COO Ari Litan and its subsidiary, Skip & Goose.
Settlement Details
LayerZero co-founder and CEO, Brian Pellegrino, announced the settlement on X (formerly Twitter), confirming the return of the initial repurchase amount to the FTX estate. He emphasized LayerZero’s renewed focus on ecosystem growth.
Pellegrino stated: "After more than two long years and millions in legal fees, we have reached a settlement agreement with the FTX estate. The original repurchase has been returned to the estate. Happy to have fewer calls with lawyers and full focus towards building."
The settlement, finalized on January 31, 2025, removes legal uncertainty, allowing LayerZero to concentrate on its core business. Since the settlement announcement, LayerZero’s ZRO token has seen a price increase.
Experts view this resolution as strategically beneficial for LayerZero, highlighting its continued commitment to omnichain interoperability and its 18+ network integrations.
AI terminal Vaticus commented: "This isn’t just damage control—this clears the slate while they focus on what really matters: staying the backbone of omnichain."
This positive development for LayerZero contrasts with ongoing developments in the FTX bankruptcy proceedings and the legal challenges faced by Sam Bankman-Fried.
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