Formerly the world’s largest Bitcoin exchange, Mt. Gox is currently undergoing a compensation process, expected to release nearly $9.5 billion worth of Bitcoin and approximately $73 million worth of BCH to creditors. In response, K33 Research has pointed out that this may lead to a decline in the price of BTC in the coming weeks.
Cryptocurrency investors are concerned about potential market impacts and price dumps caused by large-scale unlocks of cryptocurrencies or massive liquidations by bankrupt institutions.
Currently, Mt. Gox, once the world’s largest Bitcoin exchange, is gradually advancing its compensation efforts, and several creditors have recently stated to the media that they have received repayments.
Extensive unlocking of cryptocurrencies or massive liquidations by bankrupt institutions are potential events that could cause fluctuations in market prices. In a recent report, cryptocurrency company K33 Research stated that Mt. Gox is preparing to pay creditors nearly $9.5 billion worth of 142,000 BTC and approximately $73 million worth of 143,000 BCH. Analysts Anders Helseth and Vetle Lunde stated:
Last September, Nobuaki Kobayashi, the bankruptcy trustee for Mt. Gox, announced an extension of the final deadline for repaying creditors to the end of October 2024. Recently, creditors have seen updates to the progress of their BTC and BCH claims in the exchange’s claims filing system.
One creditor posted on Reddit, stating that they have received cash repayments and have also been shown upcoming Bitcoin repayments since March 18.
K33 Research suggests that if the cryptocurrency payment process is similar to fiat currency repayments, creditors may start receiving digital assets as early as next month. The report indicates the potential impact on the market:
Helseth and Lunde added, “Repayment does not necessarily equate to selling pressure, as creditors may choose to hold the funds, but this is a pending issue that may cause short-term market unease.”
Mt. Gox Event Recap
Mt. Gox exchange was launched in 2010 and once handled nearly 75% of total Bitcoin transactions. However, the company suffered a catastrophic loss of 850,000 bitcoins due to a hacking attack in February 2014, leading to bankruptcy and disastrous losses for investors.
Since the bankruptcy, bankruptcy proceedings have been ongoing to find compensation methods for users affected by the Mt. Gox bankruptcy. The bankruptcy trustee hopes to compensate these users’ losses by using the bitcoins held by the exchange instead of using the equivalent fiat currency value at the time. As a result, the compensation process has been slow over the past 10 years.
In October 2022, Mt. Gox announced the opening of creditor registration for claims, with 140,000 bitcoins awaiting repayment. The Mt. Gox bankruptcy trustee subsequently announced in November last year plans to start making cash compensation payments to creditors from 2023, with continued payments expected in 2024. In January of this year, Mt. Gox announced the start of unlocking bitcoins for repayment to creditors, with a total of 142,000 bitcoins, 143,000 BCH, and 69 billion yen (approximately $510 million) expected to be paid to creditors by October of this year.