On the morning of May 28th, Mt.Gox, the bankrupt exchange, suddenly saw a large withdrawal from its account address. Over the next 6 hours, Mt.Gox transferred a total of 141,685 bitcoins in 10 transactions, with individual amounts ranging from $200 million to $2.3 billion, worth approximately $9.8 billion.
This is the first movement of Mt.Gox’s cold wallet address in five years. The transfer of nearly 14,000 bitcoins worth nearly $10 billion has attracted high attention from the community. Compared to today’s total increase in Bitcoin ETF, which is 3,028 bitcoins, major Wall Street ETF giants like BlackRock and Grayscale each hold around $20 billion worth of bitcoins. The amount of bitcoins transferred from the Mt.Gox address yesterday accounted for nearly half of the bitcoins held by BlackRock and Grayscale.
This massive transfer indicates that one of the most important news in crypto history, the Mt.Gox theft and bankruptcy, is coming to an end, as the 10-year-long compensation process is reaching its final stage.
As early as January of this year, dForce founder Mindao released an email he received as a Mt.Gox creditor on Twitter. In the email, Mt.Gox confirmed to users the ownership of the exchange address as the receiving address for BTC/BCH and stated that “140,000 bitcoins will be unlocked in the next two months for creditor payment.” According to the latest balance sheet at the time, the exact amount of bitcoins to be unlocked by Mt.Gox in the next two months would be 141,000.
After the incident attracted high attention from the community, BlockBeats interviewed Mindao about the transfer of 140,000 bitcoins from Mt.Gox. He stated that “creditors have already registered their receiving addresses at the beginning of the year, and they will receive the tokens through exchanges like Kraken. This large transfer is probably Mt.Gox preparing for bitcoin distribution.”
In the afternoon of the same day, Mt.Gox released a statement to address community concerns, stating that the reorganization trustee is preparing for the distribution of the cryptocurrency claims as part of the restructuring plan. According to the choice of the reorganization creditors, the repayment can be made either through designated cryptocurrency exchanges or through the sale of bitcoins and bitcoin cash to obtain the proceeds for repayment.
Currently, the rehabilitation trustee has not started to repay (transfer to exchanges or sell) these assets, and BTC and BCH are still being held securely.
Will the 140,000 bitcoins cause a “Mt.Gox pit”?
The first reaction of some community members to the long-awaited “thunder” was panic.
Some community members revealed the timing of Mt.Gox’s liquidation by attorney Kobayashi, who sold 35,800 bitcoins through OTC transactions from December 2017 to February 2018 to compensate for user losses, and sold them at the peak at that time. Considering the recent exhausted upward trend in the market, many people believe that the market may experience a downward trend as a result. This morning, after breaking through $70,000, Bitcoin started to decline, with a drop of over 3%.
Will the completion of the settlement of 140,000 bitcoins really cause significant selling pressure? Regarding this event itself, the market believes that “it will have some impact, but it should not be too significant.”
In the payment plan provided by Mt.Gox to creditors, the payment amount includes the “basic payment” part and the “proportional payment” part. The amount of the basic payment part is the same, while the proportional payment part can choose between “mid-term repayment and final repayment” or “early one-time total payment.” Mt.Gox has not disclosed the specific details of the subsequent process, which means that creditors will not receive all the compensation assets at once.
Mindao stated, “Because most creditors have sold their money to those funds, this selling pressure has been offset a long time ago. And those of us who have held on until the end will definitely not sell at this time.”
Looking back over the years, the panic surrounding Mt.Gox has become a “mandatory course” for retail investors, scaring them every year. Since Mt.Gox was ordered to compensate creditors with 140,000 bitcoins in 2019, the “Mt.Gox incident” has become a negative time bomb, constantly stimulating market sentiment. Although institutional investors have gradually become the main force in the cryptocurrency market with the approval of Bitcoin ETFs, the impact of 140,000 bitcoins on the trading market will gradually diminish. However, there are still voices that believe the fear-induced fluctuations will be greater.
Crypto KOL Dayu Xiaochu expressed on Twitter, “Many people compare it to Grayscale and believe that it will not have an impact on the market. I don’t agree… If there is compensation, the market will definitely react… Panic often lasts for a period of time. However, the selling pressure is not as big as imagined, so it will be a good opportunity to buy in advance.”
According to a previous announcement by Mt.Gox, the final deadline for the repayment of these 140,000 bitcoins is October 31, 2024.
Looking back at the “crypto earthquake” ten years ago
The Mt.Gox bankruptcy event is one of the most famous events in the history of cryptocurrencies. Mt.Gox was originally created in 2010 and at its peak, it accounted for over 90% of Bitcoin trading.
In 2011, Mt.Gox was first hacked, resulting in the theft of thousands of bitcoins. In 2014, Mt.Gox suddenly announced that approximately 850,000 bitcoins (worth about $450 million at the time) were stolen from the platform, and subsequently suspended all trading and filed for bankruptcy protection. This event caused a “quake” in the crypto market, with the price of Bitcoin dropping from its highest point of $951 that year to $309, a 67% decrease.
Since the start of the bankruptcy liquidation, Mt.Gox has been in a protracted battle with creditors for several years. The price of Bitcoin has been rising steadily over the next few years, reaching $19,000 in 2019.
In 2019, the Tokyo District Court ruled for Mt.Gox to recover 141,000 bitcoins and deliver them to the trustee for safekeeping, and negotiate with all creditors to vote on the settlement plan. According to Mt.Gox’s balance sheet in 2019, the debtors held about 142,000 BTC, 143,000 BCH, and 69 billion yen (approximately $510 million at the time).
But in 2019, when the 140,000 bitcoins were determined, the price of Bitcoin was only around $10,000 at its highest. Two years later, the price of Bitcoin exceeded $60,000, causing further delays in Mt.Gox’s compensation process.
In 2022, Mt.Gox announced that its Bitcoin repayment process has been accepted by the court. Django Bits, the operator of the Mt.Gox creditor channel, stated that the repayment process may “continue for several months or even years.”
If Mt.Gox does not “pigeonhole” this time, the 10-year bankruptcy saga involving 800,000 bitcoins will finally come to an end five months later. Mt.Gox’s return to the center of community attention has also triggered a wave of nostalgia among OGs. Ten years ago, when Mt.Gox announced the loss of 800,000 bitcoins, Ethereum was also born during that time and gradually became the center of the crypto world. Ten years later, with the approval of Bitcoin ETFs and Ethereum ETFs, the crypto industry is moving towards the next stage.
