FTX had filed a lawsuit against LayerZero Labs with the aim of recovering $86 million in agreements made during the company’s impending insolvency. Following this, the CEO of LayerZero Labs made some striking statements.
Agreement Made Four Days Before Bankruptcy Application
At the outset of the lawsuit led by CEO John Ray III of FTX, the company questioned the agreements made with LayerZero Labs by former FTX executives during the company’s insolvency. The agreement that the lawsuit primarily focused on was the one made by former Alameda Research CEO Caroline Ellison with LayerZero Labs just four days before filing for bankruptcy. As part of this agreement, Alameda had agreed to forgive a $45 million loan to LayerZero in exchange for the repurchase of a 5% stake in LayerZero.
Alleged Violation of Bankruptcy Law
The main argument of the lawsuit is that such agreements are associated with FTX’s insolvency and are therefore in violation of bankruptcy law. FTX contends that these agreements should be cancelled for the benefit of the bankruptcy estate.
Longstanding Efforts Disregarded
Additionally, Bryan Pellegrino, the founder and CEO of LayerZero Labs, stated that the lawsuit filed by FTX property is “filled with unsubstantiated claims.” Pellegrino also claimed that LayerZero Labs had been making efforts for a long time to resolve the ownership dispute with FTX, but these efforts had been disregarded.
“I can only conclude that the real purpose of the lawsuit is not to solve the problem but simply to collect more legal fees.”Bryan Pellegrino
Source: The Block