Bryan Pellegrino, co-founder and CEO of LayerZero Labs, has responded to the lawsuit filed by FTX, refuting the claims made by the exchange. In a statement posted on social media, Pellegrino asserted that the entire lawsuit is filled with “unsubstantiated claims.”
He argued that LayerZero Labs, a cross-chain protocol, has actively attempted to address the issue of share ownership with FTX’s liquidators for nearly a year but has been met with disregard. Pellegrino went on to suggest that FTX’s delay in filing the lawsuit, despite having had ample time to do so, raises suspicions that the intention behind it may be to prolong the process in order to accrue more legal fees.
The lawsuit filed by FTX revolves around a series of deals between the exchange and LayerZero, including one that allowed Alameda Research, an affiliated trading company of FTX, to sell back a 5% stake in LayerZero valued at $150 million. In exchange, LayerZero forgave a $45 million loan owed by Alameda. FTX alleges that these deals, made just before FTX’s collapse, constitute fraud due to FTX’s insolvency at the time and should be reversed.
The suit also questions the resale of LayerZero’s STG tokens to the startup by Alameda, as well as withdrawals from FTX made in the 90 days prior to the exchange filing for bankruptcy. FTX claims that the two firms had close ties and that LayerZero personnel, along with their families and pets, were hosted by FTX in the Bahamas for an extended period.
LayerZero CEO Challenges FTX Lawsuit with Claims of Unsubstantiated Allegations
Pellegrino challenged these claims, stating that there is no substance to the allegations of preferential information about withdrawals. He mentioned that he personally deposited millions in the month leading up to FTX’s bankruptcy, including a $1 million deposit as late as November 7th. He also pointed out that most withdrawals were used for normal business purposes, primarily to manage gas demands efficiently, not in a panic to remove assets based on inside information about FTX’s insolvency.
FTX, under the leadership of CEO John Ray III, has recently initiated a series of lawsuits in an attempt to recover funds that were allegedly spent recklessly during the tenure of former CEO Sam Bankman-Fried. This lawsuit against LayerZero is part of FTX’s efforts to reclaim money that it believes should not have been expended.