LayerZero Labs Settles With FTX Estate, Returns Original Repurchase Amount

After over two years of legal battles and millions in legal fees, LayerZero Labs has reached a settlement agreement with the FTX estate.

After over two years of legal battles and millions in legal fees, LayerZero Labs has reached a settlement agreement with the FTX estate.

With its legal disputes now behind it, LayerZero can focus on expanding its omnichain infrastructure. Its ability to maintain its leadership in blockchain interoperability will be a key factor in its continued success.

FTX vs. LayerZero BackgroundThe dispute dates back to March 2022, when FTX Ventures participated in LayerZero Labs’ $135 million funding round. Alameda Ventures, FTX’s sister trading firm, also invested over $70 million between January and May 2022 to acquire 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 at 8% annual interest. Following FTX’s collapse in November 2022, LayerZero attempted to buy back its stake from Alameda by canceling the $45 million loan.

This move and its significant withdrawals in the months leading up to FTX’s bankruptcy triggered legal action from the FTX estate. The exchange sought to reclaim the assets, with the FTX estate accusing LayerZero of exploiting Alameda Research’s financial difficulties.

“LayerZero sought to capitalize on Alameda Research’s distressed financial position by demanding immediate repayment of its $45 million loan to Alameda Research,” an excerpt in the filing reads.

The lawsuit sought to recover $21.37 million in funds LayerZero withdrew from FTX in the 90 days before the exchange’s bankruptcy. Additionally, it sought $13.07 million from former LayerZero COO Ari Litan and $6.65 million from its subsidiary, Skip & Goose.Latest Settlement DetailsBrian Pellegrino, co-founder and CEO of LayerZero Labs, confirmed the agreement in a post on X (Twitter), articulating the return of the initial purchase. He also committed to focusing on LayerZero’s ecosystem growth.

“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). The original repurchase has been returned to the estate. Happy to have fewer calls with lawyers and full focus towards the building,” he wrote.

Under the settlement, LayerZero has agreed to return the original repurchase amount to the FTX bankruptcy foundation. The agreement was finalized on January 31, 2025, allowing LayerZero to move forward without the legal uncertainty clouding its operations.

BeInCrypto data shows that LayerZero’s ZRO token has increased by almost 5% since the Friday session opened. As of this writing, it was trading at $3.79.

Besides the broader market optimism, the surge comes as crypto industry experts view this resolution as a strategic win for LayerZero.

“This isn’t just damage control—this clears the slate while they focus on what really matters: staying the backbone of omnichain with 18 network integrations and counting,” AI terminal Vaticus commented.

Omnichain interoperability remains a crucial pillar for the future of blockchain technology. LayerZero’s ability to mitigate legal turmoil while maintaining its market dominance reinforces its long-term viability.

Meanwhile, the settlement comes as the FTX estate has initiated its repayment process. As BeInCrypto reported, FTX creditors can expect to receive their funds within 60 days, starting January 3, 2025. This marks a step in the company’s bankruptcy proceedings.

Moreover, legal controversies surrounding FTX founder Sam Bankman-Fried (SBF) continue. Recent reports indicate that his parents are seeking a presidential pardon from Donald Trump.

Bankman-Fried was convicted on multiple fraud charges related to FTX’s collapse, and his sentencing remains a high-profile issue in the financial and political spaces.