LayerZero returns repurchased stake to FTX estate

LayerZero Labs reached a settlement with the FTX estate after nearly two years of legal disputes over transactions made with Alameda Ventures, the venture capital arm of Alameda Research.

Bryan Pellegrino, co-founder and CEO of LayerZero, announced the agreement in a post on X, revealing that the firm spent “millions in legal fees” before resolving the case. The FTX estate sought over $21 million from LayerZero, alleging the firm withdrew funds before FTX’s collapse in November 2022.

“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. “Original repurchase has been returned to the estate.”

FTX’s claims against LayerZero

In 2022, Alameda Ventures acquired a 5% stake in LayerZero, sending $70 million to the company and purchasing $25 million worth of Stargate Finance (STG) tokens. When FTX filed for bankruptcy, LayerZero attempted to buy back its equity stake in exchange for forgiving a $45 million loan it extended to FTX.

However, the FTX estate sued LayerZero in September 2023, arguing that the company “negotiated a fire-sale transaction” with then-Alameda CEO Caroline Ellison, allegedly exploiting FTX’s liquidity crisis. Court filings also revealed that LayerZero planned to repurchase STG tokens for $10 million—40% of their original price—but Alameda never transferred the tokens, and no money changed hands.

Since filing for bankruptcy in 2022, the FTX estate pursued legal action against various crypto firms to recover assets. The estate’s reorganization plan officially took effect on January 3, allowing claimants with losses under $50,000 to receive repayments within 60 days.

All criminal cases tied to FTX’s collapse concluded, with former executives—including Sam Bankman-Fried, Caroline Ellison, and Ryan Salame—serving prison sentences. Bankman-Fried is currently appealing his conviction and 25-year sentence.