LayerZero founder responds to FTX team restructuring: False accusations, just trying to delay and make money

FTX's bankruptcy restructuring team recently filed a lawsuit against LayerZero Labs, an all-chain agreement company, alleging that the terms of the transaction with FTX on the eve of bankruptcy were unreasonable, accusing LayerZero Labs of taking advantage of the situation. FTX claims to retract part of the agreement and recover assets from LayerZero Labs. Bryan Pellegrino, co-founder of LayerZero Labs, responded today, stating that FTX's accusations are unfounded.

Background: The U.S. Department of Justice opposes FTX's motion to sell $3 billion in cryptocurrency assets

LayerZero Founder Responds to FTX: Denies False Accusations

Co-founder of LayerZero Labs, Bryan Pellegrino, stated that the lawsuit by FTX contains false accusations.

Regarding the FTX suit, the entire suit is filled with unsubstantiated claims. We have been in communication with the FTX liquidators for almost a year now and have time and time again attempted to proactively address the issue of ownership of the shares with them and have been…

— Bryan Pellegrino (@PrimordialAA) September 11, 2023

LayerZero Labs Reorganized Team to Make Money

LayerZero Labs has been in communication with the liquidators of FTX for nearly a year, attempting multiple times to proactively resolve stock ownership issues with them, but has been consistently ignored. Seeing that they have been waiting for the filing of false claims, this makes me believe that the intention is not to solve the problem but merely to prolong the process in hopes of gaining more legal fees.

LayerZero Labs Did Not Prioritize Withdrawals

LayerZero Labs stated that there was no prioritization of withdrawals. Bryan Pellegrino mentioned that he deposited millions of dollars, including $1 million as of November 7th, just a month before the bankruptcy. Most withdrawals were made to fulfill business needs of paying network gas fees rather than panic withdrawals.

LayerZero Labs mentioned that even up until the day before Silicon Valley Bank could not process withdrawals, they withdrew up to $100 million. In this industry, it is common knowledge that caution should be exercised whenever there are rumors, whether it be with exchanges or banks, until the issue is resolved. At that time, it was indeed unknown whether FTX was insolvent.

Attempts to Resolve Issues Ignored, FTX Reorganized Team Lacks Understanding of Blockchain

LayerZero Labs also attempted to repurchase the STG tokens sold in 2021 from FTX but could not obtain the wallet private key. As the STG tokens were about to unlock, LayerZero Labs contacted the FTX reorganized team in hopes of collaborating to reissue the tokens to acquire ownership, but they were refused. "Their lawyers seem to believe they hold the physical keys required to access the tokens, seemingly without even a basic understanding of what a private key is or its composition."

LayerZero Founder: FTX Reorganized Team's Accounting Methods are Unreasonable

Bryan Pellegrino also mentioned that the accounting methods of FTX's reorganized team are unreasonable. This is because they are calculating total withdrawals, which means if FTX has $100 billion in total trades but has $300 billion in deposits/withdrawals each month for 3 months, they would claim to owe $100 billion out of $900 billion, or if individual users have $100,000 and deposit and withdraw 10 times, they would have a debt of $1 million, even though there were never any deposits exceeding $100,000.