Mt. Gox Transfers Over 140,000 Bitcoins
The defunct Japanese cryptocurrency exchange, Mt. Gox, is set to make its final restitution to creditors by October of this year. Recently, tokens were transferred from the dormant cold wallet address of Mt. Gox, totaling over 140,000 bitcoins (BTC), to a new wallet address. This move has given many creditors hope that it is a sign of the repayment plan to come.
Mt. Gox was once a giant in the cryptocurrency trading industry, processing over 70% of global bitcoin trading volume in its prime. However, continuous hacker attacks resulted in the theft of 850,000 bitcoins, worth approximately $4.7 billion. This led to significant losses for tens of thousands of creditors, and the exchange ultimately declared bankruptcy in 2014. Since the collapse of Mt. Gox, around 127,000 creditors have been patiently waiting for fair compensation.
The recent developments regarding Mt. Gox have once again caught the attention of the market. When the exchange transferred a total of 141,686 bitcoins, worth $9.62 billion, from its cold wallet to a new address “1JbezDVd9VsK9o1Ga9UqLydeuEvhKLAPs6,” it marked the first time in over five years that these frozen funds were moved on the blockchain. This action is interpreted by the public as a clear signal that the exchange is preparing to repay creditors by October 31, 2024.
Although the exact repayment timeline has not been explicitly stated, Nobuaki Kobayashi, the trustee overseeing Mt. Gox’s restructuring, confirmed that this is part of the exchange’s plan to repay creditors, emphasizing that “the organization is managing these bitcoins and bitcoin cash (BCH) in a secure manner.”
Why are market investors concerned?
However, while this transfer action may seem like good news for creditors, many market investors are quite worried.
Mt. Gox users lost all their bitcoins around 2014, but during the past ten years, the price of bitcoin has increased significantly. Now that these creditors can finally retrieve their bitcoins, the profits they will gain will multiply many times over, making it likely that they will sell a portion of their holdings.
If these creditors indeed sell their bitcoins, a flood of sell orders will exert downward pressure on the price, causing a temporary disturbance in the cryptocurrency market. According to data from CoinMarketCap, the price of bitcoin dropped by 2% immediately after the first batch of Mt. Gox transfer news was released on May 28, reaching a low of $67,500, and then slightly rebounded to $68,000.
Market analysts and Anndy Lian, the author of “NFT: From Zero to Hero,” believe that this price fluctuation reflects the market’s concern about the potential selling pressure from creditors in the future.
However, Alex Thorn, the Head of Research at Galaxy, a cryptocurrency financial services company, stated in a tweet that he expects most of the transferred bitcoins to continue to be held by the creditors and not be sold on the market. In other words, Mt. Gox’s repayment completion does not necessarily guarantee selling pressure on the market.
Despite the slight drop in bitcoin price caused by Mt. Gox’s actions, Lian believes that the repayment issue remains one of the most urgent and long-standing problems in the cryptocurrency community.
The Mt. Gox incident serves as a reminder to participants in the cryptocurrency market about the importance of transaction security and fund protection. As the Mt. Gox event gradually comes to a close, the cryptocurrency industry is expected to prioritize security measures to prevent similar incidents from happening again.
References:
cointelegraph, coindesk