The defunct cryptocurrency exchange FTX has sued LayerZero Labs, a company that creates cross-chain protocols, in an effort to recover $21 million. LayerZero Labs allegedly withdrew these funds in violation of the law just before FTX filed for bankruptcy in November 2022, according to the lawsuit. The transactions took place between January and May 2022 and involved LayerZero Labs and Alameda Ventures, the business financing arm of FTX’s sister company Alameda Analysis.
LayerZero Labs disputes the charge.
Bryan Pellegrino, CEO of LayerZero Labs, said on X (formerly Twitter) in reaction to the complaint that it is full of unsubstantiated claims.
Furthermore, according to Pellegrino, LayerZero Labs has attempted to discuss the issue of share ownership with FTX’s liquidators for almost a year but has received no answer. Pellegrino believes that the request is intended to delay the court proceedings in order to accrue additional legal fees.
The arrangement that allowed Alameda Analysis to resell a 5% share in LayerZero for $150 million in exchange for LayerZero forgiving a $45 million debt is the focus of the criticism.
The lawsuit also draws attention to an incomplete transaction involving 100 million STG tokens, which LayerZero promised to buy back at a $10 million discount but never did. According to FTX, LayerZero reportedly took advantage of Alameda Ventures during a liquidity crisis in order to negotiate a fire-sale transaction within 24 hours.
In his claim on X, Pellegrino denied the assumption of favourable data pertaining to the withdrawals. He underlined that this claim might be simple to dispute. He revealed that he had personally deposited hundreds of thousands of “dollars” in the month prior, including $1 million as recently as November 7.