Markets
Cryptocurrency markets in turmoil as Mt. Gox multi-billion dollar payouts begin
The first payments have started according to onchain data, although the timeline for distributing the coins to investors remains unclear.
Defunct Bitcoin exchange Mt. Gox has sent ripples through the market as businesses and individuals prepare to receive refunds nearly a decade after the platform went bankrupt.
The administration that oversees Mt. Gox’s payment plans will distribute a large portion of its 142,000 Bitcoin and Bitcoin Cash to users who lost funds in the platform’s last hack in July 2014. The current payments are going to creditors who agreed to forfeit 10% of their share in exchange for an advance payment before the end of civil litigation proceedings, with Coinshares recently Estimate 75,000 coins will enter circulation.
News that Mt. Gox paid out 2014-era coins that were lost on its exchange sent cryptocurrencies surging prices to bleed out.
Bitcoin has lost 20% of its value over the past month, now trading at $55,248. Ethereum fell below $3,000, trading at $2,950 and also losing 20% over the last thirty days.
Coins of the 2014 era
Most analysts agree that the wave of selling hitting the market was triggered by the Mt. Gox payments and the likelihood of tens of thousands of coins entering the market.
When the platform went down in July 2014, the price of Bitcoin was $600, meaning that at the current price, investors are facing a potential profit of 10,000%.
Some, however, are pleased that the cryptocurrency market is ridding itself of this increasingly imminent threat.
“The return of Mt Gox coin is causing confusion today and may lead to short-term weakness for BTC, but in the long term it will be positive – the fear of Mt Gox coins hitting the market has been an overhang for so long that this is just another risk that is being removed for the long-term success of BTC,” said Rennick Palley, founding partner at early-stage venture capital firm Stratos.
Eligible companies
Five companies are eligible for Mt. Gox-era coins and are responsible for redistributing payments to people who lost money in the initial bankruptcy: Bitstamp, Bitgo, Kraken, Bitbank, and SBI VC Trade.
However, despite a June 24 notice from the trustee in charge of disbursing Mt. Gox funds indicating that funds would begin flowing in early July, details about which companies will receive the tokens first remain unclear; as does how those companies will in turn distribute the crypto they receive.
July 4th, PeckShield alert that an address linked to Mt. Gox had made a massive transfer of 47,000 BTC ($2.7 billion) to a new address, as well as 1,544 BTC worth $84 million to the aforementioned Bitbank. A day later, Mt. Gox sent another 1,200 BTC, worth $64 million, to a new address.
Although Bitbank has not confirmed the payments, data from Arkham Intelligence indicates that the company has started moving these funds into its wallets. A wallet associated with the Japanese company shows a large number of Bitcoin transfers over the weekend, ranging from less than 1 BTC to 90 BTC.
Although fears that fund recipients will sell these coins weigh on the market, some analysts say not everyone will sell.
“While a large portion of the redeemed tokens will absolutely be sold, I expect seasoned whales to stay in the game ahead of the next bull run,” said Phillip Alexeev, CrossFi’s chief growth officer. He told The Defiant that investors have managed to live without these funds for many years and “unless they are absolutely desperate,” can continue to wait until their returns are maximized.