FTX, a cryptocurrency exchange that went bankrupt, has taken legal action against LayerZero Labs, a cross-chain protocol. FTX claims that $21 million was unlawfully taken from them just before they closed down in November, and they want to recover these funds through the lawsuit.
The lawsuit states that LayerZero Labs took out this money illegally right before FTX declared bankruptcy in November 2022.
These transactions happened between LayerZero Labs and Alameda Ventures, which is the venture capital arm of FTX’s related company, Alameda Research. These transactions occurred from January to May 2022.
As per the legal papers submitted on September 9th, Alameda Ventures made two payments totaling over $70 million to purchase approximately 4.92% of LayerZero.
Additionally, in March, Alameda Ventures paid an additional $25 million to acquire 100 million STG tokens through a public auction. These tokens will be distributed gradually over six months, starting in March 2023.
In the lawsuit, FTX claims that LayerZero took advantage of Alameda Ventures during a period of financial instability, stating: “LayerZero was well aware that Alameda Research was facing a liquidity crisis and, within about 24 hours, negotiated a fire-sale transaction with Caroline Ellison, Alameda Research’s then-CEO.”
Apart from canceling the agreement, the lawsuit also aims to get back money that was taken out shortly before FTX declared bankruptcy.
This includes about $21.37 million from LayerZero Labs, $13.07 million from Ari Litan, who used to be the company’s chief operating officer, and $6.65 million from a subsidiary called Skip & Goose.