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    LayerZero resolves legal battle with FTX’s bankruptcy estate

    LayerZero settles its legal dispute with FTX's bankruptcy estate

    LayerZero Labs, an innovative player in the omnichain interoperability space, has reached an agreement with the bankruptcy estate of the now-defunct crypto exchange FTX.

    This resolution marks the end of a two-year legal battle that had been both costly and attention-diverting.

    The settlement allows LayerZero to focus on development

    LayerZero’s CEO, Bryan Pellegrino, took to social media to announce the settlement, highlighting the relief it brings to focus more on development rather than litigation.

    The dispute originated from transactions made just before FTX’s collapse, where Alameda Research, closely linked to FTX, had agreements with LayerZero, including selling back its equity stake in LayerZero in exchange for forgiving a $45 million loan, and another deal involving the repurchase of Stargate (STG) tokens.

    The FTX estate had contested these transactions, claiming they were fraudulent since Alameda was insolvent at the time.

    The estate aimed to claw back shares and funds, leading to a legal confrontation where LayerZero had to defend itself against what they described as “unsubstantiated claims.”

    As detailed in a memo sent out to LayerZero_Labs investors, the settlement involved LayerZero buying out all interests that FTX, FTX Ventures, and Alameda held in LayerZero, including equity positions, token warrants, and any agreements.

    This move has effectively returned the “original repurchase” to the FTX estate, satisfying the legal demands and ending the litigation.

    Financially, this settlement comes at a time when LayerZero is described as cash-rich, boasting $107 million in direct cash deposits and an additional $27 million in on-chain funds, with the majority in stablecoins.

    This financial health provides LayerZero with a substantial runway, estimated at seven years under aggressive spending scenarios, positioning the company ahead of its cash-strapped competitors.

    Following the settlement, LayerZero has repurchased locked STG tokens from an auction previously managed by Alameda Research, which are now to be handed over to the Stargate Foundation.

    This action reflects LayerZero’s commitment to community governance, allowing the community to decide the future of these assets.

    Furthermore, despite having $11.5 million on FTX that was used operationally, Pellegrino pragmatically considers this sum as negligible for planning purposes due to uncertainties in recovery, showcasing a cautious yet forward-thinking approach to financial management.

    With this settlement, LayerZero steps into a new chapter, free from the legal shackles that had bound its resources and focus.

    The firm’s robust cash position now allows it to concentrate on innovation and expansion in the blockchain interoperability field, distancing itself from the legal shadows of FTX’s collapse.

    The post LayerZero resolves legal battle with FTX’s bankruptcy estate appeared first on Invezz

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