LayerZero Labs, an omnichain interoperability protocol, has settled with the FTX bankruptcy estate after a prolonged legal battle.
The company’s co-founder and CEO, Bryan Pellegrino, announced the resolution on social media platform X, bringing an end to a dispute that had spanned more than two years and incurred millions in legal fees.
Settlement Ends Lengthy Legal Battle
Pellegrino emphasized that the decision to settle was not about fighting FTX itself but rather about addressing creditor claims, noting that LayerZero is also a creditor in the bankruptcy proceedings.
“After more than two long years and millions in legal fees (lawyers always win), we have reached a settlement agreement with the FTX estate. 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 stated.
He added that the original repurchase had been returned to the estate and expressed relief at being able to shift focus back to building rather than legal disputes.
FTX Lawsuit Against LayerZero
The legal dispute between LayerZero Labs and FTX began in 2023 when the FTX estate sued the company to recover more than $86 million in assets. Before FTX collapsed, LayerZero had entered a deal with Alameda Research, the trading arm of FTX, forgiving a $45 million loan to Alameda.
FTX’s bankruptcy team argued that these transactions were fraudulent because Alameda was already insolvent at the time of the transfers. The FTX estate sought to reverse the deals and reclaim funds to repay creditors affected by the exchange’s collapse.
Another key point of contention was a separate agreement in which Alameda was set to sell back 100 million Stargate (STG) tokens to LayerZero for $10 million, despite originally purchasing them for $25 million. However, this transaction was never completed.
Also Read: President Trump Appoints Former FTX Prosecutor Danielle Sassoon As Interim Manhattan U.S. Attorney
LayerZero’s Financial Position and Stargate Tokens
Despite the legal battle, LayerZero Labs has maintained a strong financial position. In a 2022 tweet, the company revealed that it had a direct cash balance of $107 million and $27 million in on-chain funds, ensuring it could operate for more than seven years even under unfavourable market conditions.
Pellegrino also reminded investors about locked Stargate Finance (STG) tokens, stating that any decision regarding their sale or transfer would be determined by the community.
FTX Begins Creditor Repayments
Meanwhile, FTX has started $16 billion in repayments to its creditors. The first round of payments will go to those with claims below $50,000, with distributions expected to begin in early February.
Notably, FTX creditor Sunil Kavuri confirmed expectations of repayments happening soon.
ZRO Token Gains Despite Lower Trading Volume
Following the settlement announcement, LayerZero’s native token (ZRO) saw a price increase. ZRO is currently trading at $3.85, reflecting a 7% rise in the past 24 hours. However, despite the price surge, 24-hour trading volume has dropped by nearly 14%, indicating mixed market sentiment.
With legal hurdles now behind it, LayerZero Labs can shift its full attention back to development and expansion. The settlement marks another chapter in the ongoing FTX bankruptcy saga, as efforts to repay creditors continue.