Mt. Gox launches Bitcoin repayments
8.5 billion dollar selling pressure ahead?
Mt.Gox, the Bitcoin exchange that collapsed in 2014 (after a major hack, among other things), will start Bitcoin and Bitcoin Cash payouts at the beginning of next month. This is according to an official document from the rehabilitation trustee.
The rehabilitation trustee has been preparing to make repayments in Bitcoin and Bitcoin Cash as part of the rehabilitation plan. Now that these preparations have been completed, the Rehabilitation Trustee will commence repayments in Bitcoin and Bitcoin Cash to the crypto exchanges in due course [...]. The repayments will be made from the beginning of July 2024.
From the document
The Bitcoin price plummeted by several percent on Monday morning in response to this news - to below USD 61,000.
Potential selling pressure of over 140,000 BTC
Mt.Gox lost around 850,000 Bitcoin from users in 2014. However, 200,000 BTC have been recovered over the years, of which 141,686 BTC are now to be paid out to creditors by October 31. Mt.Gox already transferred this sum to a new address at the end of May - after five years of inactivity.
As the Bitcoin price was only worth a few hundred US dollars at the time, it can be assumed that the approximately 127,000 injured parties will sell the Bitcoin they received back ten years later immediately. The price of Bitcoin has increased more than a hundredfold since then. Although the repayment has been on the cards for some time, the price has slumped significantly in response to the potentially imminent selling pressure.
As the "Bitcoin Cash" network split off from Bitcoin in 2017, Mt.Gox will also pay out the equivalent of around USD 50 million worth of BCH to creditors. The already very weak cryptocurrency Bitcoin Cash lost even more ground this morning. As the network is much less widespread and there is hardly any buying demand, the approximately 143,000 units of Bitcoin Cash that will soon be up for sale could pull the price down much further than was the case with Bitcoin.
In addition to the BTC and BCH holdings, there are also 69 billion Japanese yen worth around 432 million US dollars, which will be used to compensate the customers who were bounced.
Negative effects only temporary
The payout of Bitcoin by Mt.Gox has been hovering over the market like a sword of Damocles for years. It had been a foregone conclusion for some time that this would happen one day. However, it was not fully priced in, as the price reaction to this news shows.
It cannot be assumed that the almost 142,000 BTC will come onto the market in one fell swoop. Firstly, the payout process will take several weeks and secondly, it is not certain that all victims will exchange their holdings in full for fiat money - despite the phenomenal returns they have made from the forced "hodling".
The debacle surrounding the Mt.Gox exchange, which was affected by several hacks, showed early on in the history of Bitcoin how essential self-custody is. The collapse of the FTX crypto exchange in November 2022 also impressively demonstrated that even regulated exchanges are not secure enough to entrust your own holdings to. Only if you are in possession of the "private keys" yourself - ideally via a hardware wallet - can you be sure that the Bitcoin really belongs to you.
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