Since the defunct Japanese cryptocurrency exchange platform, Mt. Gox, said it would start paying out nearly $3bn worth of bitcoin (BTC) to its clients affected in a 2011 hack, some traders have been anxious about the potential impact of the BTC refund on the crypto king’s price.
Many investors fear that Mt. Gox’s clients, who will reunite with their stolen coins after many years, will be tempted to sell them for whopping profits, and thus further increase selling pressure.
Could BTC‘s recent pullback, which saw some $4,000 wiped from the main cryptocurrency’s value in a week, have its roots in the Mt. Gox clients’ potential sell-off?
What is Mt. Gox?
Mt. Gox was a Tokyo-based cryptocurrency trading platform that operated from 2010 to 2014. At the height of its operations, the platform was responsible for 70% of BTC‘s trading volumes.
In February 2014, Mt. Gox declared bankruptcy claiming $64m losses after being subjected to a hack that saw 740,000 bitcoins (BTC) stolen from its clients and another 100,000 bitcoins (BTC) from the company itself. More than 800,000 stolen bitcoins totaled $460m in value at the time.
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They haven’t had access to their bitcoin for 8 years and they are on average 80-100x up on their investments. Of course at least half of them will sell.
— Sergio #Bitcoin (@Sergio87815471) August 21, 2022
Repayment plan
Some 200,000 of the stolen bitcoins were recovered by Mt. Gox’s team in 2014, but these coins have been locked in litigation since.
In November 2021, a rehabilitation plan drawn by Mt. Gox bankruptcy trustees was made binding by Tokyo District Court’s confirmation order.
On 6 July 2022, Mt. Gox bankruptcy trustee, Nobauaki Kobayashi, sent out letters to creditors, outlining the next steps of the repayment plan.
Kobayashi stated that “from approximately the end of August this year until all or part of the repayments made as initial repayments is completed for safe and secure repayments.”
BTC retreat
After reaching two-month heights last week, the biggest of the cryptocurrencies repeatedly failed to convincingly break through the $25,000 resistance mark and was ultimately sent in a different direction, slipping below $21,000. Could the decline be due to Mt. Gox clients dumping their returned coins en masse?
Has Mt. Gox’s refund impacted last week’s BTC decline?
In a word, ‘no’.
The repayment plans have little to do with the crypto king’s recent pullback, as the payout is yet to begin later this month. Moreover, when the repayment begins, it will happen in tranches rather than a one-off refund.
In the meantime, some traders are anxiously watching out for the potential effect the refund may have when it does happen, and it could be that some are nervously selling now on fears of a bigger sell-off to come when the Mt. Gox bitcoins are repatriated.
A Twitter user writing under the nickname Sergio Bitcoin wrote.“They haven’t had access to their bitcoin for eight years, and they are on average 80-100x up on their investments. Of course, at least half of them will sell.”
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