After a prolonged legal battle, LayerZero Labs has reached a settlement with the FTX estate over disputed transactions dating back to 2022. CEO Bryan Pellegrino announced the resolution on Jan. 31, revealing that millions in legal fees and two years of litigation have finally come to an end. The lawsuit stemmed from FTX’s claim that LayerZero withdrew funds before the crypto exchange’s infamous collapse.

FTX had initially sought over $21 million from LayerZero, citing an equity stake in the crosschain protocol. According to Pellegrino, the decision to settle was made in consideration of creditors rather than fighting FTX itself. He confirmed that the original repurchase agreement had been returned to the estate.

In 2022, Alameda Ventures, FTX’s venture capital arm, acquired a 5% stake in LayerZero, sending $70 million to the protocol and purchasing $25 million in STG tokens. When FTX went bankrupt in November of that year, LayerZero attempted to buy back its equity by forgiving a $45 million loan. However, FTX’s estate filed a lawsuit in September 2023, alleging that LayerZero took advantage of Alameda’s liquidity crisis, striking an undervalued deal with former Alameda CEO Caroline Ellison.

Court filings also revealed that LayerZero had planned to repurchase the STG tokens for $10 million—just 40% of their original price—but the transaction never went through. Alameda never transferred the tokens, and no funds were exchanged.

FTX’s bankruptcy proceedings have resulted in multiple lawsuits against crypto firms, with many still unresolved. However, the exchange’s reorganization plan officially took effect on Jan. 3, paving the way for repayments to creditors. Users with claims under $50,000 are expected to receive compensation within 60 days, marking a step toward closure in one of crypto’s biggest financial disasters.