Users affected by FTX’s 2022 crash will begin receiving bankruptcy distributions, with the option to receive payouts in stablecoins, through Kraken and BitGo.

The FTX estate confirmed that its bankruptcy disbursement plan will become effective on January 3, 2025, following court approval by U.S. District Judge John Dorsey in October.

Sunil Kavuri, a spokesperson for FTX’s largest creditor group, identified Kraken and BitGo as the confirmed distribution partners, citing the platforms’ payment capabilities. According to Kavuri, customers will have the option to receive repayments in stablecoins.

The plan, ruled by Judge Dorsey in Delaware, approved 98% of creditors to receive 118% of their claim value in early October. FTX’s decision to repay users in cash drew criticism from Kavuri and other bankruptcy claimants.

Yet, court documents showed that 94% of creditors with claims against the crypto exchange voted “Yes” to the plan. This group comprises nearly $7 billion in claims, according to the reorganization plan.

Bankruptcy administrator John J. Ray III commended his interim team for recovering about $16 billion in assets and cash for FTX creditors. Ray took over as CEO in late 2022, replacing Sam Bankman-Fried. Companies under the FTX umbrella, such as Alameda Research, also collapsed, and several of Bankman-Fried’s top associates signed plea deals with federal prosecutors in exchange for lighter sentences.

By November 2023, Bankman-Fried was found guilty on seven charges and sentenced to 25 years in prison for fraud. Under CEO Ray’s leadership, the defunct crypto exchange has worked to reconstruct the remnants of Bankman-Fried’s one-time crypto empire.

For the past two years, our team of professionals have meticulously and efficiently worked to recover billions of dollars to reach this point. The Plan becoming effective in January 2025 and the start of distributions are reflections of the outstanding success of the recovery efforts.

John J. Ray III, FTX CEO

Crypto custodian BitGo plans to launch a dollar-backed stablecoin next year, offering rewards to liquidity providers.

BitGo is set to launch a dollar-backed stablecoin dubbed USDS in January 2025, positioning it as the first “open-participation stablecoin” in the market. In a Sept. 18 post on X, BitGo said the stablecoin is “fully backed by short-duration T-bills, overnight repos, and cash, ensuring high liquidity and low risk with real-time proof of reserves.”

BitGo aims to stand out by offering liquidity providers a share of the returns generated from its reserves, creating a new incentive model in a market currently dominated by Tether’s (USDT) and Circle’s USD Coin (USDC).

The move comes as BitGo, which holds a dominant 96.6% market share in the Wrapped Bitcoin market with its wBTC token, faces increasing competition from new entrants like Coinbase. On Sept. 12, Coinbase launched cbBTC, a new ERC20 token backed 1:1 by Bitcoin held in Coinbase’s custody. The token is available on the Base and Ethereum networks, signaling a direct challenge to BitGo’s market leadership.

In the meantime, some decentralized finance protocols are reevaluating their use of wBTC due to concerns over its affiliations with TRON founder Justin Sun. Sky, formerly known as MakerDAO, is now considering whether it should remove wBTC as collateral from its borrowing platform SparkLend due to BitGo’s impending partnership with BitGlobal, which is perceived as potentially shifting control of wBTC to a venture associated with Sun.

BitGo has selected LayerZero as the digital asset custody provider’s official interoperability provider for the Wrapped Bitcoin token.

On Sept. 10, LayerZero (ZRO) announced that BitGo now uses LayerZero’s Omnichain Fungible Token standard for the crypto company’s Wrapped Bitcoin (WBTC). Projects that already tap into OFT are Swell, Ethena and EtherFi among others.

BitGo expands WBTC to BNB Chain and Avalanche

BitGo and its partners launched Wrapped Bitcoin in 2019 with the goal of bringing Bitcoin (BTC) into the DeFi ecosystem on Ethereum (ETH). BTC holders can use WBTC to access decentralized finance applications across lending, borrowing, swapping, and other services.

BitGo’s selection of LayerZero comes as the firm expands its WBTC token, a major asset in the decentralized finance space, to two more blockchain networks—Avalanche (AVAX) and BNB Chain.

WBTC is already available on Ethereum, Tron, Base, Osmosis, and other networks. The latest integrations, BNB Chain and Avalanche, rank as the fourth and seventh largest chains by total value locked respectively as seen on DeFiLlama.

Native WBTC minting

According to LayerZero, BitGo’s choice of the OFT Standard for WBTC allows for the token’s native use and transfer across multiple blockchains.

Users will be able to mint WBTC natively on the supported chains without facing the risks associated with token bridging from Ethereum. Apart from omnichain composability, other benefits of using LayerZero for WBTC interoperability include unified supply and modular security.

As part of the collaboration with LayerZero, BitGo will implement its own decentralized verifier network, which will play a key role in ensuring that every omnichain WBTC transaction is verified. BitGo will collaborate with Polyhedra and LayerZero Labs on the DVN.