Bitcoin Payouts from Mt. Gox starts, will it affect the price?
The rehabilitation manager of the exchange Mt. Gox that went bankrupt in 2014, Nobuaki Kobayashi has published a new letter today regarding refunds of the recovered Bitcoin. In it, Kobayashi advises that the deadline for creditors to submit repayment information expired yesterday, April 6, 2023.
After several years of delays, the window for Bitcoin repayments is thus opened, which is expected to be carried out by 31 October 2023. The letter also states that the recovery manager is currently making the necessary preparations for the repayments.
Among other things, this includes Kobayashi contacting banks, money transfer providers and cryptocurrency exchanges and custodians to clarify repayment arrangements:
[…] which includes confirming the selection and registration made by the rehabilitation creditors, as well as participating in discussions and sharing information with banks, transfer providers and cryptocurrency exchanges or custodians involved in the repayment.
In light of this, the trustee also states that it is “expected to take some time before repayment is initiated”.
The base payment, interim repayment and early lump sum repayment are tentatively scheduled for 21 October 2023, although the exact timing of repayment to individual redevelopment creditors has yet to be determined. In addition, Kobayashi notes that the deadline for repayment can be extended with the approval of the Tokyo District Court, if necessary.
Notably, Luxembourg-based crypto exchange Bitstamp is one of four crypto exchanges selected by Mt. Gox trustee to help with chargebacks. Bitstamp has published repeatedly guidance in recent weeks about what creditors should do to make their claims.
How will it affect the Bitcoin price?
According to the rehabilitation plan, victims of Mt. Gox hack recovered a total of 141,686 Bitcoin (BTC), around 143,000 Bitcoin Cash (BCH) and 69 billion yen. However, the amount of the refunds is still not clear. Creditors could choose whether to receive their claim in cryptocurrencies or fiat until the deadline.
In addition, the first ¥200,000 (around $1,520) of each creditor’s claim will be paid in yen, according to a moderator for Mt. Gox Bankruptcy Subreddit. If the claim is higher, creditors can choose between crypto and cash, receiving 71% back in crypto and 29% in cash after the first payment.
Therefore, the actual amount of Bitcoin that can actually put selling pressure on the market is difficult to predict. In particular, it should also be noted that the manager does not dump all Bitcoin on the market at once, but spreads it out over the period until the end of October.
The two largest creditors, Bitcoinica (a New Zealand-based crypto exchange) and Mt. Gox Investment Funds has chosen to have its bankruptcy funds paid out in Bitcoin. Estimates suggest they represent 20% of all claims.
However, according to a Bloomberg report, Mt. Gox Investment Fund has already stated that they will keep their BTC and not sell it. Also, a Bitcoin price crash due to Mt. Gox payouts quite unlikely at the moment as the market is able to digest the low volumes despite historically low liquidity.
At press time, the BTC price was trading at $27,921.
Featured image from Chainalysis Blog, chart from TradingView.com
