LayerZero Labs CEO Responds to FTX Lawsuit: Allegations of Unsupported Claims

Bryan Pellegrino, co-founder and CEO of LayerZero Labs, responded to the lawsuit filed by the FTX estate earlier today, which aimed to recover tens of millions of dollars from agreements made between the two companies.

In a post on X, formerly known as Twitter, Pellegrino stated, “Regarding the FTX suit, the entire lawsuit is filled with unsupported allegations.” He mentioned that LayerZero Labs, a cross-chain protocol, has actively attempted to resolve the issue of share ownership with FTX’s liquidators for nearly a year but has received no response.

Pellegrino added, “Seeing them wait this long to file a lawsuit filled with unsupported claims leads me to believe their intent is not to resolve the issue but simply to prolong the process in the hope of accruing more legal fees.”

The FTX estate, led by CEO John Ray III, filed a lawsuit against LayerZero earlier in the day to reverse a series of agreements made with the startup just before FTX’s collapse.

The lawsuit primarily focused on a deal that allowed Alameda Research, the trading company linked to FTX, to sell back a 5% stake in LayerZero valued at $150 million. In return, LayerZero forgave a $45 million loan it had provided to Alameda. The lawsuit alleges that, as FTX was already insolvent at the time, these deals constituted fraud and should be reversed.

The lawsuit also questioned the resale of LayerZero’s STG tokens to the startup by Alameda and withdrawals made by LayerZero’s former chief operating officer Ari Litan from FTX in the 90 days before the exchange filed for bankruptcy. The lawsuit suggested close ties between the two firms, stating that LayerZero staff, their families, and even dogs were hosted by FTX in the Bahamas for “several months.”

Pellegrino refuted the claim of preferential information around the withdrawals, stating, “The fact that there is any claim about preferential information around the withdrawals can easily be proven false.” He mentioned that he personally deposited millions, including $1 million as late as November 7th, leading up to the bankruptcy. He also argued that most withdrawals were for routine business purposes, primarily to manage gas demands between L1 currencies for the relayer in a cost-efficient manner, not based on asymmetric information about FTX’s solvency.

Under Ray III’s leadership, FTX has filed multiple lawsuits recently to recover funds it claims were mismanaged by executives at the exchange operator under former CEO Sam Bankman-Fried. In July, the estate filed a lawsuit to recover over $320 million spent on the acquisition of Digital Assets AG, a Swiss startup that became FTX Europe.

source