Mt. Gox Transfers Over 140,000 Bitcoins
The defunct Japanese cryptocurrency exchange, Mt. Gox, is scheduled to make its final repayment to creditors by October of this year. Recently, there has been a transfer of tokens from the cold wallet address that had been dormant for over five years, with over 140,000 Bitcoins (BTC) being transferred to a new wallet address. This has given hope to many creditors that it is a sign of the repayment plan finally coming to fruition.
Mt. Gox was once a powerhouse in the cryptocurrency trading world, handling over 70% of global Bitcoin trading volume at its peak. However, it suffered consecutive hacker attacks, resulting in the theft of 850,000 Bitcoins, worth around $4.7 billion. This led to significant losses for tens of thousands of creditors, and ultimately, the exchange declared bankruptcy in 2014. Since the collapse of Mt. Gox, approximately 127,000 creditors have been eagerly awaiting fair compensation.
The recent developments surrounding Mt. Gox have once again drawn attention from the market. When the exchange transferred a total of 141,686 Bitcoins, worth $9.62 billion, from the 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. It is also interpreted by the public as a clear signal that the exchange is preparing to repay the creditors by October 31, 2024.
While the exact repayment timeline has not been specified, Nobuaki Kobayashi, the trustee in charge of Mt. Gox’s rehabilitation, confirmed that this transfer is part of the exchange’s plan to compensate the creditors and emphasized that the organization is securely managing these Bitcoins and Bitcoin Cash (BCH).
However, despite this transfer being seemingly good news for the creditors, many market investors are concerned. Mt. Gox users lost all their Bitcoins around 2014, and during this ten-year period, the value of Bitcoin has increased significantly. Now that these creditors can finally retrieve their Bitcoins, their profits will multiply, making it likely that they will sell a portion of their holdings. If these creditors indeed sell their Bitcoins, a flood of sell orders could create downward pressure on the price and cause a temporary turmoil in the cryptocurrency market.
According to data from CoinMarketCap, the price of Bitcoin dropped by 2% to a low of $67,500 immediately after the news of the first Mt. Gox transfer was released on May 28. It then slightly recovered to $68,000.
Anndy Lian, a market analyst and author of the book “NFT: From Zero to Hero,” believes that this price volatility reflects the market’s concerns about the potential selling pressure from the creditors in the future.
However, Alex Thorn, Director of Research at Galaxy, a cryptocurrency financial services company, stated in a Twitter post that he expects most of the transferred Bitcoins to be continuously held by the creditors and not sold on the market. In other words, even after Mt. Gox completes the repayment, it may not necessarily create selling pressure in the market.
Despite the slight price drop caused by Mt. Gox’s actions, Lian stated that the repayment issue remains one of the most urgent and long-standing problems in the cryptocurrency industry.
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 case gradually reaches its conclusion, the cryptocurrency industry is expected to prioritize security measures to prevent similar incidents from happening again.
References:
Cointelegraph, CoinDesk