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LayerZero Settles FTX Dispute, Focus Returns to DeFi Innovation

Coin WorldFriday, Jan 31, 2025 2:04 pm ET

1min read

LayerZero Labs, a blockchain technology company, has reached a settlement with the FTX bankruptcy estate, concluding a two-year legal battle over financial transactions made before FTX's collapse. The agreement resolves claims over disputed funds, ending a contentious chapter for both parties.

The legal dispute began in 2023 when the FTX estate filed a lawsuit against LayerZero Labs, alleging fraudulent transactions involving Alameda Research, FTX's sister company. The bone of contention was a deal made between LayerZero and Alameda just days before FTX's bankruptcy, where Alameda agreed to sell back a 5% stake in LayerZero for $150 million, with LayerZero forgiving a $45 million loan Alameda owed.

LayerZero Labs CEO and co-founder Bryan Pellegrino announced the settlement in a recent X post, expressing relief over the resolution. He emphasized that the dispute was ultimately not between LayerZero and FTX, but rather between LayerZero and FTX's creditors, of which LayerZero was also a part. With the lawsuit behind them, LayerZero can now focus on building its core business, known for its cross-chain messaging protocol, and continue innovating in decentralized finance (DeFi).

The FTX estate's legal battle was not limited to the LayerZero Labs lawsuit. After the exchange's collapse, the estate faced several lawsuits from different parties, all claiming damages from FTX's mismanagement. Some of the more high-profile cases involved significant claims from other crypto projects and individuals who lost substantial investments. Meanwhile, FTX founder Sam Bankman-Fried faces several fraud and conspiracy charges, with his trial becoming a key part of the legal battles related to the FTX bankruptcy.

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