TechFlow reported, according to The Block, that FTX, led by CEO John Ray III, has filed a lawsuit against LayerZero Labs seeking to recover $86 million transferred just before its bankruptcy. The lawsuit centers on a transaction reached on November 7, 2022—four days before FTX filed for bankruptcy protection—between Alameda Research’s former CEO Caroline Ellison and LayerZero Labs. Under the deal, Alameda agreed to sell its 5% equity stake in LayerZero (currently valued at $150 million based on LayerZero's valuation) in exchange for LayerZero waiving a $45 million loan previously extended to Alameda. The lawsuit alleges that at the time of the transfer, FTX was already insolvent, rendering these transactions fraudulent under bankruptcy law and therefore voidable. Alameda also agreed to sell 100 million Stargate (STG) tokens to LayerZero for $10 million. Alameda had originally paid $25 million earlier that year to acquire these tokens. The lawsuit claims that although LayerZero Labs attempted to take control of the tokens by reissuing them to wallets it controlled, the transaction was never completed and was later halted due to threats of litigation from FTX’s estate.
The lawsuit also seeks to recover withdrawals made by LayerZero and its former COO Ari Litan from the FTX.com and FTX.US exchanges within 90 days prior to the exchanges’ bankruptcy filings. During this period, LayerZero withdrew $21 million from its FTX.com account, though approximately $16 million of that amount was withdrawn by late October—before FTX's troubles became public. The suit notes that the remaining $5 million was withdrawn on November 7, the same day as the repayment to LayerZero. Additionally, the lawsuit names Litan as a defendant and challenges approximately $19.6 million withdrawn from FTX.US accounts in the days immediately preceding FTX’s bankruptcy filing, with the withdrawals conducted under Litan’s name and his limited liability company, Skip & Goose.
