Japanese crypto exchange Mt. Gox will pay 142,000 Bitcoins (BTC) to its creditors. These creditors had their investments locked up when the exchange went bankrupt in 2014 after a hack, which led to the theft of around 850,000 Bitcoins.
In a letter sent out in July, the trustee of Mt. Gox’s remaining funds that it will begin paying out creditors by the end of August.
Mt. Gox saga
Mt. Gox was one of the biggest exchanges around the early years of Bitcoin adoption. In February 2014, the stock exchange incurred a large loss. The exchange suspended withdrawals in early February 2014, claiming to have detected suspicious behavior in its digital wallets. Hundreds of thousands of Bitcoins were lost by the exchange. The number of coins reported missing ranged from 650,000 to 850,000. By the end of the month, the company suspended withdrawals and halted trading, leading to a 36 percent drop in the price of Bitcoin by the end of February, which was around $540 for a Bitcoin .
The local and international authorities were able to move around 200,000 Bitcoins, resulting in a destabilized market. Mt. Gox filed for bankruptcy in the Tokyo District Court and was subsequently ordered to liquidate in April 2014. Subsequently, Mt. Gox’s assets placed in an estate that included over 200,000 Bitcoin and Bitcoin Cash.
Some Bitcoin have already been sold before the upcoming Bitcoin release. Nobuaki Kobayashi, the trustee of Mt. Gox estate sold 24,658 BTC (worth $260 million at the time) during a 2018 meeting of creditors.
In 2022, Kobayashi revealed Mt Gox’s remaining assets, and also outlined a plan to pay out Mt. Gox’s investors. The creditors must apply and submit their claim to BTC, which will then be assessed and refunded.
According to the latest announcement, Mt. Gox Assets: 141,686 BTC, 142,846 Bitcoin Cash and 69.7 billion Yen in cash.
Experts’ view
According to Rajagopal Menon, Vice President, WazirX, Mt. Cox’s “massive BTC dump resulted from their 2021 efforts to develop a civil rehabilitation plan with single payments at fixed rates for creditors”.
“The falling value of BTC was linked to the constant liquidation of Bitcoin in the short term by the company’s trustees in 2018. We can witness relief in the markets after the distribution, which is currently an amalgamation of fears of macro-level issues such as war, and the strength of the dollar. The current market is expected to witness a scattered supply of Bitcoins, as distribution is set to take place over the coming months as creditors sign up for early payouts, he says.
“Most of the creditors are early investors of Bitcoin, familiar with the life-changing effects of long-term investment in BTC, and there may be resistance from such investors to sign up for early payments,” he adds.
Matthew Graham, CEO of Sino Global Capital, a VC firm says: “We talk a lot about refunds in fiat and minority refunds in Bitcoin. If there is (refund), it’s 70 percent cash and 30 percent Bitcoin.”
He adds: “You have to remember the characteristics of the people in crypto of that particular time period – 2012, 2013, 2014 and the early years. These were the die-hard true believers. If most of the money comes in fiat, you can even see that opposite, some of the fiat is used to buy Bitcoin.”
Vikram Subburaj, CEO at Giottus Crypto Platform, said that Mt. Gox recovery has been long-awaited, bringing relief to customers who lost their Bitcoins in the 2014 heist.
“It is noteworthy that on a daily basis almost 1.5 million Bitcoins are traded on exchanges (in volume). There will likely be some selling, given that the heist occurred when BTC was trading below $500, but it should only affect prices in the short term ( perhaps a week).Some institutions have also bought some claims from clients, who may not be in a rush to sell to moderate the overall effect.We believe that macroeconomic conditions will continue to have a greater impact on BTC and its prices than Mt. Gox mining As of now, this has sparked some fears of mass dumping, Subburaj adds.
