Bitcoin
Mt. Gox begins paying bitcoin to creditors a decade after collapse
- The administrator of Mt. Gox, the Japanese bitcoin exchange that filed for bankruptcy a decade ago, said Friday that the company has started making payments in bitcoin and bitcoin cash to some of its creditors.
- The announcement goes on to say that refunds to other users of the hacked exchange would be “made promptly” once a certain set of conditions were met.
- Customers of the Tokyo-based exchange waited 10 long years to get their money back.
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The administrator of Mount Gox, the Japanese bitcoin stock exchange that went bankrupt a decade ago, on Friday he said the company has started making payments in bitcoin and bitcoin cash to some of its creditors.
The announcement added that refunds to other users of the hacked exchange would be “made promptly” if they met certain conditions, including passing account verification as well as subscribing to one of the designated digital asset exchanges through which the bankrupt estate is facilitating disbursements in digital tokens.
“We ask creditors eligible for rehabilitation to please wait a while,” the statement continued.
The price of bitcoin has fallen nearly 6% in the last 24 hours.
Customers of the Tokyo-based exchange have been waiting 10 years to get their money back.
Once the world’s largest cryptocurrency exchange, Mt. Gox filed for bankruptcy in February 2014 after a series of heists that saw up to 950,000 bitcoins — worth more than $58 billion at current prices — disappear.
Mt. Gox blamed the bitcoin disappearance on a bug in the cryptocurrency’s structure. While users were receiving incomplete transaction messages when accessing the exchange, the coins may have been illicitly moved out of their accounts by hackers, Mt. Gox said.
After filing for bankruptcy, 140,000 of the missing bitcoins were recovered, meaning that approximately $9 billion worth of bitcoin will be returned to its owners at today’s prices. Bitcoin was trading at around $600 at the time of the bankruptcy. Today, it is worth over $54,000 — an increase of almost 9,000%.
According to data from Arkham Intelligence, Mt. Gox moved billions of dollars worth of bitcoin from its cryptocurrency wallets on Thursday and Friday ahead of the payment memo.
More than 47,000 bitcoins worth $2.7 billion have been moved from an offline cryptocurrency wallet associated with Mt. Gox, Arkham Intelligence reported Friday.
A portion of the funds, worth $84.9 million, was sent to Japanese cryptocurrency exchange Bitbank, which is listed among the platforms that support refunds for Mt. Gox users, according to Arkham Intelligence. Another $63.6 million in bitcoin was sent to an unknown counterparty, which Arkham Intelligence said was “likely a listed refund exchange.”
Mt. Gox wallets continue to hold 138,985 bitcoins, worth about $7.5 billion at current prices, according to Arkham Intelligence, meaning billions of dollars worth of cryptocurrency have yet to be paid out.
Analysts previously told CNBC that Expect Mt. Gox Payment Plan to Lead to Some Heavy Bitcoin Sellingalthough this is likely to be short-lived and precede further price gains later this year and into early 2025.
John Glover, chief investment officer at cryptocurrency lending firm Ledn, told CNBC that the windfall for Mt. Gox users would likely translate into large bitcoin selloffs as investors look to lock in gains.
“Many will clearly cash out and take advantage of the fact that having their assets trapped in the Mt. Gox bankruptcy was the best investment they ever made,” said Glover, who was previously a managing director at Barclays. “Some will clearly choose to take the money and run,” he said in emailed comments.
JPMorgan analysts said in a note last month that they expect Mt. Gox customers to sell some of their bitcoins to cash in on the cryptocurrency’s seismic gains.
“Assuming most of the liquidations of Mt. Gox creditors occur in July, [this] creates a trajectory where cryptocurrency prices come under… pressure in July but begin to recover from August onwards,” they wrote.
Ultimately, the total amount owed to creditors — roughly 140,000 bitcoins — represents roughly 0.7% of the total 19.7 million bitcoins currently in circulation.
Analysts say this means that while it is likely to hit prices, there is enough liquidity available to cushion the impact of any sharp sell-off.
James Butterfill, head of research at CoinShares, told CNBC that the billions of dollars worth of bitcoin traded on reputable exchanges daily this year suggests that “there is sufficient liquidity to absorb these sell-offs during the summer months.”
Jacob Joseph, research analyst at CCData, agreed with this point, saying that markets are more than capable of absorbing the selling pressure.
“In addition, a healthy portion of creditors will likely accept a 10% haircut on their assets to get paid early, and not all assets will be liquidated in the open market, reducing overall selling pressure,” he told CNBC in an email.