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Struggling cryptocurrency exchange FTX is taking legal action against LayerZero Labs. The exchange is hoping to retrieve around $21 million, asserting that these funds were unlawfully taken before FTX ceased operations in November 2022, recent court records from September 9 indicate.
Delving into the background, a series of transactions between January and May 2022 occurred. Specifically, Alameda Ventures, associated with FTX through its sibling company Alameda Research, engaged in financial interactions with LayerZero. Records reveal that Alameda Ventures parted with over $70 million in two separate transactions, buying an approximate 4.92% share in LayerZero. In addition, in a public sale during March, they disbursed $25 million to acquire 100 million STG tokens, set for gradual distribution from March 2023.
Interestingly, in the midst of these financial dealings, LayerZero lent $45 million to Alameda Ventures' overarching company, Alameda Research, in February. This loan came with an 8% yearly interest rate.
November's downturn for FTX saw LayerZero attempting to negotiate a deal. They aimed to retrieve their stake held by Alameda, suggesting a swap of their shares for the release of the $45 million debt. An arrangement concerning the 100 million STG tokens was also on the table. LayerZero proposed to reacquire them at a reduced $10 million price on November 9. However, this deal didn't see fruition. LayerZero neither made the payment nor received the tokens from Alameda Ventures.
The core of FTX's legal complaint hinges on an accusation. They claim that LayerZero took advantage of Alameda Ventures during a time of financial strain.
Beyond this, FTX also seeks to recoup funds taken just before it declared bankruptcy, which involves a sum of roughly $21.37 million from LayerZero Labs. The lawsuit also mentions amounts involving LayerZero's ex-COO, Ari Litan, and an affiliate company, Skip & Goose.
It's worth noting, FTX has taken legal action against other entities before. Post its financial decline, FTX aims to recover vast sums from multiple subsidiaries.
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