Renowned messaging protocol LayerZero has settled with FTX after a two-year-long battle. The dispute began after financial disagreements, costing millions in legal fees with prolonged court proceedings.
Sharing the update on his X account, Bryan Pellegrino, LayerZero’s co-founder and CEO, expressed relief when the issue ended.
“After more than two long years and millions in legal fees (lawyers always win), we have settled an agreement with the FTX estate,” he stated.
The conflict, originally arising from a dispute between LayerZero and FTX, was discovered to result from creditors’ claims. According to his tweet on X, the team realized it was not a battle with FTX but the creditors.
He emphasized that because LayerZero was one of the creditors, the team felt justified in rejecting the claims but prioritized resolution for everyone’s benefit.
LayerZero returned the original purchase of FTX estate to consolidate the agreement, emphasizing the company’s decision to embrace resolution and focus on innovation.
Legal Battles Between FTX and LayerZero
FTX, once recognized as one of the largest cryptocurrency exchanges in the industry, has had its fair share of legal and financial challenges following its filing for bankruptcy in November 2022.
Since then, the exchange has intensified efforts to recover assets and repay investors, including filing lawsuits against separate organizations.
Interestingly, LayerZero’s dispute with FTX dates back to March 2022, when FTX ventures participated in LayerZero Labs’ $135 million funding round. At the time, Alameda Ventures, FTX’s sister trading firm, invested over $70 million in 5 months in 2022 to acquire a minimum stake in LayerZero.
Alameda also received a $45 million loan from LayerZero at 8% annual interest. However, following the collapse of FTX in 2022, LayerZero resolved to buy back its stake and cancel the $45 million loan.
This move caused a ripple effect within the FTX estate, prompting them to take legal action to reclaim the assets. According to the filing, LayerZero intended to capitalize on Alameda Research’s weakened financial position by demanding immediate repayment of its $45 million loan.
Concurrently, this settlement has come following FTX’s decision to repay its creditors. According to a memo on its website, creditors can make claims and expect to receive their funds within the next 35 days from January 31.
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