LayerZero reaches a complete equity buy-out agreement with FTX and Alameda

Quick Take

  • LayerZero Labs issued a letter saying it has come to an agreement with FTX, FTX Ventures and Alameda for a complete equity buyout.  
  • It held $11.5 million on crypto exchange FTX and has written that down to zero, but expects to receive some sort of compensation in the future.
  • LayerZero claims it is well-capitalized with approximately $134 million, mostly in cash and stablecoins.

LayerZero Labs, a cross-chain messaging and bridging startup, said it has come to an agreement with FTX, FTX Ventures and Alameda Research for an equity buyout.

LayerZero Labs had raised a Series A+ round led by Sequoia Capital, a16z and FTX Ventures in March and was valued at $1 billion. 

In a letter issued to investors and later shared on Twitter, LayerZero Labs said the deal includes the entirety of FTX's equity position, token warrants and “any and all agreements" between the firms.

Although LayerZero claims it is well-capitalized with approximately $134 million — 90% of which is in cash or stablecoins — it held $11.5 million on FTX.

“For the sake of sanity we’ll treat this as a $0 for the moment, although presumably some amount on the dollar is likely recoverable,” the letter said.

Although LayerZero took a hit, co-founders Bryan Pellegrino and Ryan Zarick claim to have at least seven years of financial runway with their current holdings. In May, The Block revealed that LayerZero Labs had been seeking fresh funding in a round that would have valued it at $3 billion — but the deal is yet to close. 

In an acquisition separate from its equity buyout, LayerZero purchased all of Alameda’s exposure to Stargate, a protocol under the LayerZero Labs umbrella, by buying all of its locked STG tokens. Alameda had acquired these tokens in March during the STG public token sale, a controversial action as they bought the entire supply in the first available block and had been farming and selling the token. The total amount available was $25 million.

Alameda locked the purchased STG tokens which emitted yield in the form of more STG. It then proceeded to sell the tokens it received from staking in various transactions like this one. 

Former Alameda co-CEO Sam Trabucco had tweeted earlier on the same day Alameda made its first sale of STG it had received from farming — not its purchased STG it had locked — "we won't be selling any of the tokens we bought for at least 3 years." 

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

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