Bryan Pellegrino, the co-founder and CEO of LayerZero Labs, has issued a strong response to the lawsuit filed by FTX, which aims to recover tens of millions of dollars related to past deals between the two companies.
In a statement on the social media platform X (formerly Twitter), Pellegrino criticized the FTX suit, stating that it is filled with unsupported claims. He asserted that LayerZero Labs, a cross-chain protocol, has been actively trying to address the ownership of its shares with FTX’s liquidators for nearly a year but has received no response.
Pellegrino added, “To see them wait all this time to file a suit filled with unsubstantiated claims leads me to believe the purpose is not to settle the issue but simply prolong the process in hopes of receiving more legal fees.”
FTX, under the leadership of CEO John Ray III, filed the lawsuit against LayerZero Labs in an attempt to reverse a series of deals made with the startup just before FTX’s collapse. The lawsuit focuses on a deal that allowed Alameda Research, FTX’s affiliated trading company, to sell back a 5% stake in LayerZero valued at $150 million. In exchange, LayerZero forgave a $45 million loan it had extended to Alameda. The suit alleges that since FTX was insolvent at the time, these deals constitute fraud and should be reversed.
CEO of LayerZero Labs Challenges FTX Lawsuit, Demands Evidence
The lawsuit also questions the resale of LayerZero’s STG tokens to the startup by Alameda and withdrawals made from FTX in the 90 days preceding the exchange’s bankruptcy filing, which were initiated by LayerZero’s former COO Ari Litan. The suit suggests that the two companies had close ties and that LayerZero personnel and their families were hosted by FTX in the Bahamas for “several months.”
Pellegrino refuted the claims related to preferential information around the withdrawals, stating, “In no way did we know if FTX was insolvent at the time.”
FTX, led by Ray III, has filed multiple lawsuits in recent months to recover funds it claims were recklessly spent by executives at the exchange operator during the tenure of former CEO Sam Bankman-Fried. In July, FTX filed a lawsuit to recover over $320 million spent on the acquisition of Digital Assets AG, a Swiss startup that became FTX Europe.