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The confidant about Mount Gox, the Japanese bitcoin exchange that collapsed into bankruptcy a decade ago, he said on Friday that the company has started making payments in bitcoin and bitcoin cash to some of its creditors.
The announcement added that payouts to other users of the hacked exchange would be “promptly made” if they meet certain conditions, including account verification, as well as registration on one of the designated digital asset exchanges through which the bankruptcy estate facilitates disbursements to digital coupons.
“We ask the eligible rehabilitation creditors to wait for a while,” the statement continued.
The price of bitcoin has fallen almost 6% in the last 24 hours.
Customers of the Tokyo-based exchange waited 10 years to get their money back.
What is Mount Gox?
Once the largest cryptocurrency trading venue in the world, Mt. Gox filed for bankruptcy in February 2014 after a series of heists resulted in up to 950,000 bitcoins — worth more than $58 billion at today’s prices — disappearing.
Gox blamed the disappearance of bitcoin on a bug in the cryptocurrency framework. While users were receiving incomplete transaction messages when accessing the exchange, the coins may have actually been illegally moved by hackers from their accounts, said Mt. Gox.
After the bankruptcy filing, 140,000 of the missing bitcoins were recovered — meaning about $9 billion worth of bitcoins will be returned to owners, at today’s prices. Bitcoin was trading around $600 at the time of the crash. Today it’s worth over $54,000 — a nearly 9,000% increase.
According to data from Arkham Intelligence, on Thursday and Friday, Mount Gox moved billions of dollars in bitcoins from its crypto wallets before the repayment note.
More than 47,000 bitcoins worth $2.7 billion were moved from an offline cryptocurrency wallet associated with Mount Gox, Arkham Intelligence announced Friday.
A part of the funds, worth $84.9 million, was sent to the Japanese crypto exchange Bitbank, which is among the platforms that support payments to users of Mt. Gox, according to Arkham. An additional $63.6 million in bitcoin was sent to an undisclosed counterparty, which Arkham said was “probably a listed payments exchange.”
The wallets Mt. Gox continue to hold 138,985 bitcoins, worth about $7.5 billion at current prices, according to Arkham, meaning billions of dollars worth of cryptocurrency have yet to be paid out.
How will this affect bitcoin?
analysts previously told CNBC expect that the repayment plan of Mt. Gox will lead to a large sell-off in bitcoin, although this is likely to be short-lived and preceded by further price increases later this year and into early 2025.
John Glover, chief investment officer at cryptocurrency lending firm Ledn, told CNBC that the windfall for users of Mt. Gox will likely translate into a massive selloff in bitcoin as investors look to lock in profits.
“Many will clearly cash out and enjoy the fact that having their assets stuck in the Mt. Gox bankruptcy was the best investment they ever made,” said Glover, who was previously chief executive 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 clients of Mt. Gox to sell some of their bitcoin to take advantage of the seismic gains for the cryptocurrency.
“Assuming that most liquidations from Mt. Gox’s creditors occur in July, [this] creates a trajectory where cryptocurrency prices come under pressure in July, but start to recover from August onwards,” they wrote.
Ultimately, the total amount owed to creditors — about 140,000 bitcoins — represents about 0.7% of the total 19.7 million bitcoins currently in circulation.
Analysts say this means that, while it is likely to affect prices, there is enough liquidity available to cushion the blow of any sharp selloff.
James Butterfill, head of research at CoinShares, told CNBC that the billions of dollars worth of bitcoin traded daily on trusted exchanges this year suggests that “liquidity is sufficient to absorb these sales in the summer months.”
Jacob Joseph, research analyst at CCData, echoed this point, saying markets are more than capable of absorbing the selling pressure.
“Furthermore, a healthy portion of creditors are likely to take a 10% haircut on their holdings to receive repayment earlier, and not all holdings are going to be liquidated in the open market, reducing overall selling pressure,” he told CNBC. via e-mail.
