FTX's $3.4B Liquidation Drama: The Legal Tangle with LayerZero
No attachments for this post
FTX faces a bustling week ahead. Not only is the exchange pushing for the green light to liquidate a whopping $3.4 billion in cryptocurrency, but it's also taking LayerZero, an onchain interoperability protocol, to court to reclaim a missing $21 million.
Delaware Bankruptcy Court is gearing up for a verdict on FTX's massive $3.4 billion asset sale request on September 13. If approved, Galaxy Digital, helmed by Mike Novogratz, will steer the sale, where FTX can trade tokens up to $100 million weekly, potentially doubling that cap for certain tokens.
FTX's current crypto reservoir boasts $685 million in Solana, $529 million in FTT, $268 million in Bitcoin, and a miscellany of other crypto assets including Aptos, Dogecoin, Polygon, XRP, and stablecoins. Also, a neat $1.2 billion lies in external crypto exchanges.
Evgen Verzun of Kaizen.Finance warns of a possible dip in the crypto market, referencing past significant sales. Yet, at press time, SOL's decline sits at 4%. However, Messari, a crypto intelligence firm, emphasizes that the real concern is the number of tokens, not their outright value. Adding to this, RR2 Capital's Crypto Rand reminds that SOL tokens are bound by a vesting timetable until 2025, hence short-term prices shouldn’t waver.
Yet, the fate of LayerZero hangs in balance. They allegedly siphoned off $21.37 million from FTX shortly before its fall. FTX argues that LayerZero violated their agreement, where FTX's venture capital wing, Alameda, poured in $70 million to buy a 4.92% LayerZero share.
LayerZero is now under fire for fraudulent transfers, preferential transfers, and more, with FTX's lawyers on the hunt to retrieve large amounts of multiple crypto assets. Furthermore, FTX is chasing $13.07 million from ex-COO of LayerZero, Ari Litan, and $6.65 million from Skip & Goose, after suspicious asset transfers to their wallets.
Comments on this post
No comments have been added for this post.
You must be logged in to make a comment.