Mt. Gox Announces Commencement of Debt Repayment to Creditors
Recently, the cryptocurrency market and the booming Taiwan Stock Exchange have seen contrasting trends. The cryptocurrency market is shrouded in gloom, with the price of Bitcoin continuously falling. It has not only dropped below the $60,000 mark but has also reached a low point below $55,000, causing concerns in the market.
Bitcoin has been in a downward trend since June. According to data from CoinMarketCap, as of the time of writing, Bitcoin has fallen by 5% in the past 24 hours, reaching $55,522. The decline over the past seven days is even more significant, at 9.39%.
The recent decline in Bitcoin may be related to the announcement by the Bitcoin exchange Mt. Gox that it will begin repaying its creditors. Charles Edwards, the founder of the Bitcoin hedge fund Capriole Investments, mentioned in a post on social media platform X that a large amount of Bitcoin has been observed moving on the blockchain, indicating that Mt. Gox is preparing to repay its debts.
Why is Bitcoin falling?
Mt. Gox to commence repayments
Mt. Gox was a Bitcoin exchange founded in the Shibuya ward of Tokyo, Japan in 2010. It even became the world’s largest Bitcoin exchange at one point, handling over 70% of global Bitcoin transactions.
However, in February 2014, Mt. Gox suffered a massive Bitcoin theft by hackers, which severely impacted its operations. Eventually, on February 24, 2014, Mt. Gox filed for bankruptcy protection in Japan, leaving over 12,700 creditors owed more than $900 million worth of Bitcoin.
It is worth mentioning that the price of Bitcoin at that time was even less than $1,000.
After more than a decade, these victims have been waiting for compensation from Mt. Gox. Finally, on June 24th of this year, Mt. Gox announced that it would begin repaying its creditors in the form of Bitcoin (BTC) and Bitcoin Cash (BCH) starting from July.
However, receiving compensation may not be a good thing for investors. Why does it affect the decline of Bitcoin and the cryptocurrency market?
Analysts believe that these creditors have been waiting for over a decade to reclaim their funds, so many investors may choose to cash out the profits that have been sitting unused for ten years. Simply put, when investors sell their cryptocurrencies for cash, a large amount of Bitcoin is released into the market, creating significant selling pressure and increasing the selling pressure.
German government sells approximately 10,000 BTC in two weeks
In addition to this, the German police confiscated 50,000 Bitcoins (worth $2.17 billion at the time) earlier this year, with one suspect voluntarily transferring the Bitcoins to the Federal Criminal Police Office (BKA).
In June, these Bitcoins began to be sold, with a total of approximately 9,600 Bitcoins being sold.
Recently, the German government transferred 1,300 Bitcoins to cryptocurrency exchanges Kraken and Coinbase, and 1,700 Bitcoins to an anonymous wallet.
Miguel More, CEO of blockchain data tracking platform Arkham, stated that the transfers from wallets to exchanges may indicate an intention to sell the tokens.
Facing the upcoming large-scale sell-offs, the confidence in the cryptocurrency market is overshadowed.
References:
cointelegraph,
coindesk