Crypto exchange FTX has taken legal action against LayerZero Labs in an attempt to recover $21 million in funds that were allegedly withdrawn illegally before FTX’s shutdown in November 2022. The lawsuit, filed on September 9, relates to transactions made between Alameda Ventures, the venture capital arm of Alameda Research, and LayerZero between January and May 2022.
According to court documents, Alameda Ventures made two transactions worth over $70 million to acquire a stake of roughly 4.92% in LayerZero. Additionally, in March, Alameda Ventures purchased 100 million STG tokens for $25 million at a public auction, with the tokens to be distributed over a six-month period starting in March 2023.
In February, LayerZero loaned $45 million to Alameda Ventures’ parent company, Alameda Research, under a promissory note with an annual interest rate of 8%. When FTX encountered a crisis in November, LayerZero attempted to negotiate the return of its stake from Alameda Ventures. As part of the agreement, the $45 million loan would be forgiven and shares would be returned to LayerZero. Another deal involving the purchase of 100 million STG tokens was also reached, but it was never completed as LayerZero did not pay and Alameda Ventures did not transfer the tokens.
FTX alleges that LayerZero took advantage of Alameda Ventures’ liquidity crisis. The lawsuit seeks not only the cancellation of the agreements but also the recovery of funds withdrawn shortly before FTX’s bankruptcy filing, including $21.37 million from LayerZero Labs, $13.07 million from former COO Ari Litan, and $6.65 million from subsidiary Skip & Goose.
This is not the first lawsuit FTX has initiated in its effort to recoup funds. The bankrupt exchange is also seeking to recover billions from transactions made by various subsidiaries prior to the collapse of its conglomerate.
Cointelegraph reached out to LayerZero Labs for comment but did not receive a response at the time of publication. It is important to note that the lawsuit does not involve LayerZero Power Systems, a company unrelated to the crypto industry that owns the LayerZero trademark.
In conclusion, FTX has filed a lawsuit against LayerZero Labs, alleging that the company illegally withdrew $21 million in funds. The case is connected to previous transactions between Alameda Ventures and LayerZero. FTX is seeking to cancel the agreements and recover the withdrawn funds. This legal dispute is part of FTX’s broader efforts to reclaim funds from transactions made by various subsidiaries.
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