FTX, the bankrupt crypto exchange, has recently filed a lawsuit against LayerZero Labs, a cross-chain protocol, in an attempt to recover $21 million that was allegedly withdrawn illegally prior to FTX’s shutdown in November 2022. The lawsuit claims that LayerZero took advantage of Alameda Ventures, the venture capital arm of Alameda Research, FTX’s sister company, during a liquidity crisis. The funds in question were part of several transactions between Alameda Ventures and LayerZero made between January and May 2022.

The court documents reveal that Alameda Ventures paid over $70 million to acquire a 4.92% stake in LayerZero. Additionally, in March, Alameda Ventures purchased 100 million STG tokens for $25 million, to be distributed from March 2023 onwards.

During these transactions, LayerZero also loaned $45 million to Alameda Ventures’ parent company, Alameda Research, with an 8% annual interest rate. When FTX faced its crisis in November, LayerZero sought a deal to return its stake in exchange for forgiving the $45 million loan. Another deal involving the purchase of 100 million STG tokens was also agreed upon, but it was never completed.

In the lawsuit, FTX is seeking the recovery of funds withdrawn before the bankruptcy filing, which includes approximately $21.37 million from LayerZero Labs, $13.07 million from its former COO Ari Litan, and $6.65 million from a subsidiary named Skip & Goose.

FTX is currently trying to recoup billions in funds from transactions made by various subsidiaries before the collapse of its conglomerate. This is not the first lawsuit filed by FTX against another company. The lawsuit is not related to LayerZero Power Systems, an unrelated company that owns the LayerZero trademark and is not involved in the crypto industry.

Summary

Bankrupt crypto exchange FTX has sued LayerZero Labs, a cross-chain protocol, to recover $21 million in funds that were allegedly withdrawn illegally before FTX’s shutdown in November 2022. The funds were part of transactions between Alameda Ventures and LayerZero. FTX is also seeking the recovery of funds from other subsidiaries before the collapse of its conglomerate.

FAQs

What is FTX?

FTX is a cryptocurrency exchange that filed for bankruptcy in November 2022.

What is LayerZero Labs?

LayerZero Labs is a cross-chain protocol that is being sued by FTX for the alleged illegal withdrawal of funds.

What is Alameda Ventures?

Alameda Ventures is the venture capital arm of Alameda Research, which is FTX’s sister company. It was involved in transactions with LayerZero Labs.

What is the lawsuit about?

The lawsuit filed by FTX against LayerZero Labs is to recover $21 million that was allegedly withdrawn illegally before FTX’s shutdown. FTX claims that LayerZero took advantage of Alameda Ventures during a liquidity crisis.

Is LayerZero Labs the same as LayerZero Power Systems?

No, LayerZero Labs and LayerZero Power Systems are different entities. LayerZero Power Systems owns the LayerZero trademark but is not involved in the crypto industry.

Is FTX suing any other companies?

Yes, apart from LayerZero Labs, FTX is also trying to recoup billions in funds from transactions made by various subsidiaries prior to the collapse of its conglomerate.