Bankrupt FTX Exchange Files Lawsuit Against LayerZero Labs Seeking to Recover $21 Million
Bankrupt digital currency exchange FTX has initiated legal action against LayerZero Labs, a cross-chain protocol, in an attempt to recover $21 Million in funds that were allegedly withdrawn unlawfully prior to FTX’s closure in November 2022. The lawsuit, filed on September 9, states that the transactions took place between Alameda Ventures, the deal financial resources arm of Alameda Research, and LayerZero. According to court documents, Alameda Ventures paid over $70 Million in two transactions to acquire a 4.92% stake in LayerZero. In addition, in March, Alameda Ventures purchased 100 Million STG tokens for $25 Million at a public auction. LayerZero lent $45 Million to Alameda Research in February. FTX seeks the return of funds withdrawn before its bankruptcy filing, including $21.37 Million from LayerZero, $13.07 Million from its former COO, and $6.65 Million from a subsidiary.
The bankruptcy of FTX has led to legal battles as it tries to recover lost funds. This lawsuit against LayerZero Labs is part of FTX’s efforts to recoup $21 Million. It alleges that LayerZero took advantage of Alameda Ventures during a liquidity crisis. FTX is likewise pursuing legal action against other subsidiaries to reclaim billions of dollars in transactions made before its collapse. As bankruptcies in the cryptocurrency industry become more common, these cases highlight the need for regulatory oversight and caution when engaging in digital currency transactions.
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