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Will Mt. Gox Bitcoin repayment affect the market?



In the heat of the bankruptcy trend from crypto firms, Mt. Gox, a bankrupt Bitcoin exchange shut down for almost 10 years recently made moves to repay creditors. The exchange was founded in 2010, closed down in 2014 following a hack where it lost hundreds of thousands of Bitcoin, and has long suspended trading and no operation on its website. Mt. Gox creditors however may start getting their first bitcoin repayments from March 10th.

According to the repayment information by Mt. Gox, the deadline for customers to select a payment method and register information on a payee is slated for March 10, 2023. 

The repayment information sent sentiments into the market with speculations that the move could impact the Bitcoin price.

Will the Bitcoin price crash or pump?

The hack in 2014 had over 800,000 bitcoins missing from the exchange, but about 20% of the funds were recovered, however, the repayment could have an impact on the Bitcoin market. About 142,000 BTC together with 143,000 in bitcoin cash (BCH) and $510 million valued at 69 billion Yen were earlier recovered, hence, there exists a potential for the repayment to impact market price, an Mt. Gox balance sheet from 2019 revealed.

Analysis shows that the amount of bitcoin in Mt. Gox’s possession represents around 90% of the average supply active within the last 5 three days and 28% in the last week. 

A “minimal” downward impact is predicted to come on the Bitcoin price as two of Mt. Gox’s largest creditors opted to receive a larger pay of their repayment in BTC. This implies that the trustee overseeing the bankruptcy estate won’t have to sell off a significant portion of Mt. Gox recovered bitcoin holdings to settle the requests. In reverse, the BTC would have been sold off to fulfill the fiat request.

The two creditors are the suspended crypto exchange Bitcoinica and MtGox Investment Funds (MGIF). They will be paid 21% of their locked funds as of the time of the hack in 2014.

Also, a moderator of the MtGox Insolvency confirmed that the payments will be made in a mix of crypto (BTC and BCH) and fiat. Further, each creditor’s claim worth within 200,000 yen will be paid in yen and if their claim is greater they choose crypto and cash (a mix of around 71% crypto and 29% cash after the initial payment).

An Mt. Gox creditor, Blockstream CEO Adam Back commented that the payback will be a “bonus to cold store” since he had considered the locked Bitcoin in Mt. Gox since 2014 as a loss.

Each creditor is expected to register and nominate an exchange to receive the funds on their behalf.

Mt. Gox’s “rehabilitation plan” avails options on how creditors can be repaid and creditors who fail to register within the deadline will not receive “early lump-sum repayment, Payment in virtual currency for part of the virtual currency rehabilitation claim, Payment by bank transfer, and Payment using remittance by fund transfer provider,” Mt. Gox said.

Read also; 

Five crypto scams to watch out for

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