Formerly the world’s largest Bitcoin exchange, Mt. Gox is currently undergoing a compensation process and is expected to release nearly $9.5 billion worth of Bitcoin and approximately $73 million worth of BCH to creditors. K33 Research suggests that this may cause a decline in the BTC price in the coming weeks.
Cryptocurrency investors are concerned about significant unlocks or liquidations by bankrupt institutions, as these events have the potential to impact the market and cause price dumps.
Currently, Mt. Gox, once the world’s largest Bitcoin exchange, is gradually progressing with its compensation efforts. Several creditors have recently reported to the media that they have received repayments.
In their latest report, K33 Research states 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 state:
“In September of last year, Mt. Gox bankruptcy trustee Nobuaki Kobayashi announced an extension of the final deadline for repayment to October 2024. Recently, creditors have seen updates in the progress of their BTC and BCH claims in the exchange’s claims filing system.”
One creditor posted on Reddit that they have already received cash repayments and have also seen upcoming Bitcoin repayments since March 18.
K33 Research suggests that if the cryptocurrency payment process is similar to fiat currency repayments, creditors may begin receiving digital assets as early as next month. Regarding the impact on the market, the report states:
“Repayment does not necessarily equate to selling pressure, as creditors may choose to hold the funds. However, this is a pending issue that may create short-term market uncertainty.”
Mt. Gox Event Recap
Mt. Gox exchange was launched in 2010 and once handled nearly 75% of total Bitcoin transactions. However, in February 2014, the company suffered a catastrophic loss of 850,000 Bitcoins in a hacking attack, leading to bankruptcy and significant losses for investors.
Since the bankruptcy, the bankruptcy litigation process has been ongoing to find compensation methods for users affected by Mt. Gox’s bankruptcy. The bankruptcy trustee hopes to compensate these users for their losses using the Bitcoins held by the exchange, rather than compensating them with the equivalent value of fiat currency at the time. Therefore, after ten years, the progress of this compensation case has been slow.
It was not until October 2022 that Mt. Gox announced the opening of creditor registration for claims, with 140,000 Bitcoins awaiting delivery for repayment. The Mt. Gox bankruptcy trustee then announced in November last year plans to begin making cash compensation payments to creditors starting from 2023, with continued payments expected in 2024. In January of this year, Mt. Gox announced the start of Bitcoin unlocks 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 this year.