On May 28th, the continuous large BTC transfers from Mt.Gox caused some market panic.
According to Whale Alert, as of 14:11:04 Beijing time, Mt.Gox has transferred a total of 141,658 BTC (equivalent to $9.6 billion). This is the first time since 2018 that there has been a significant movement of assets in Mt.Gox wallet addresses.
Axler Adler Jr, a researcher at CryptoQuant, stated that “all funds in Mt.Gox’s cold wallet have been transferred to a new wallet: the balance of the address starting with 1JbezD is currently 141,000 BTC.”
According to Mt.Gox’s creditor repayment plan, Mt.Gox needs to distribute the 142,000 BTC and 143,000 BCH it holds to the creditors by October 31, 2024.
As the deadline for Mt.Gox’s repayment approaches, large BTC transfers from its wallet addresses may be seen as a prelude to selling, causing BTC to temporarily drop below $68,000.
Currently, according to an official announcement from Mt. Gox, the transfer of Bitcoin has been confirmed as preparation for the deadline of creditor repayment on October 31st.
Ten years after its bankruptcy, Mt.Gox’s repayment plan is still ongoing.
After losing more than 800,000 BTC in a theft, the Japanese cryptocurrency exchange Mt. Gox announced its bankruptcy and entered bankruptcy protection in 2014.
After ten years of bankruptcy, Mt. Gox’s repayment plan is still ongoing. In September 2023, the deadline for the basic repayment, early lump sum repayment, and midterm repayment, which was originally scheduled for October 31, 2023, was extended to October 31, 2024.
According to Mt.Gox’s balance sheet in 2019, Mt.Gox needs to repay 142,000 BTC, 143,000 BCH, and 69 billion yen ($510 million) to its creditors.
According to the repayment notice from Mt.Gox in 2023, Mt.Gox has provided two repayment options to the creditors: basic repayment and proportional repayment.
In the basic repayment, the first 200,000 yen claimed by each creditor will be paid in Japanese yen. In the proportional repayment, creditors can choose between “early lump sum repayment” or “midterm and final repayment”.
In the early lump sum repayment method, the part exceeding 200,000 yen can be paid in a combination of BTC, BCH, and yen, or the entire amount can be paid in fiat currency.
On the other hand, “midterm and final repayment,” which involves a higher proportion of repayment, requires waiting for the outcome of litigation, which is expected to take 5-9 years.
In 2023, when the Mt.Gox repayment window opened, Mt.Gox entered the formal repayment stage.
In mid-November 2023, Nobuaki Kobayashi, the bankruptcy liquidator of Mt. Gox, informed users via email that they were working to start cash repayments within 2023. According to a creditor document from Nobuaki Kobayashi, he redeemed 7 billion yen ($46.9 million) from the bankruptcy trust on November 17th for subsequent compensation operations.
In December 2023, several creditors, including the founder of the Japanese exchange bitFlyer, Yuzo Kano, revealed on social media that they had received partial compensation, which was in the form of yen and did not involve token compensation.
In January 2024, a creditor from Poland and Japan also stated that they had received repayment, with 80% of their claims refunded in USD through bank transfers.
During this period, there were no abnormal movements in Mt.Gox’s on-chain wallets.
Is Mt.Gox’s on-chain wallet finally showing signs of dumping?
Mt.Gox’s massive BTC repayment plan is seen as the sword of Damocles hanging over the cryptocurrency market.
The fluctuating compensation dynamics of Mt.Gox have caused some degree of market panic more than once. In December 2023, several Mt.Gox creditors revealed that they had received compensation, and the BTC price briefly fell as a result of this news.
However, unlike the previous compensation dynamics, this time Mt.Gox involves the transfer of a large amount of BTC on the blockchain. Arkham Intelligence shows that this is the first time since 2018 that Mt.Gox has transferred assets from its “cold wallet,” and as of now, more than 140,000 BTC has been transferred.
The last on-chain activity related to Mt.Gox’s wallets occurred on July 24, 2023, but that transaction only transferred a very small amount of BTC (about $1), speculated to be for checking address control permissions.
In addition, earlier this year, some creditors received compensation-related emails from Mt.Gox, confirming the receipt addresses for BTC/BCH and stating that Bitcoin would be unlocked for creditor payments in the next two months.
The deadline for Mt.Gox’s repayment is set for October 31, 2024. In April 2024, over a month before the recent on-chain asset movement, Mt. Gox creditors saw updates to their BTC and BCH claim amounts in the exchange’s claims filing system, suggesting that Mt. Gox may be making early compensation payments to creditors.
Currently, according to an official announcement from Mt. Gox, the transfer of Bitcoin has been confirmed as preparation for the deadline of creditor repayment on October 31st.
In April 2024, cryptocurrency research firm K33 Research issued a report warning cryptocurrency users that Mt. Gox is preparing to distribute approximately 142,000 bitcoins (BTC) and 143,000 bitcoin cash (BCH) to creditors, and this massive release of cryptocurrency “may become a relevant negative price impact factor in the coming weeks.”
Due to the bankruptcy proceedings in Japan, the identities of the claimants cannot be disclosed, but many claimants have revealed some information to the media.
In November 2023, Protos, a cryptocurrency media outlet, mentioned in an article titled “Who owns MtGox claims to billions of dollars in bitcoin?” that the claims in MtGox are highly concentrated among the largest holders. Only 226 claimants own more than 50% of the claims in MtGox. These 226 claimants can receive 84,650 bitcoins.
The list of some of the known largest claimants of Mt.Gox is as follows:
Mt.Gox Investment Fund (MGIF): As of March 8, 2023, MGIF is the largest creditor of Mt.Gox.
Fortress Investment Group: Not to be confused with Fortress Trust, the group has provided cash offers to Mt.Gox claimants.
Kraken: Kraken’s Jesse Powell served as an advisor to Mt.Gox and created a portal website for thousands of victims to submit their claims. Many smaller Mt.Gox claims were consolidated through Kraken.
Tibanne: Claims to own up to 88% of Mt.Gox’s shares.
CoinLab: Claims that Mt.Gox owes it at least $170 million, and possibly up to $16 billion. In 2019, CoinLab increased its lawsuit to $16 billion, objecting to the revenue-sharing agreement with Mt.Gox. This $16 billion claim far exceeds the total claims of all other creditors and exceeds the assets held by the Mt.Gox bankruptcy trustee. The settlement amount for this lawsuit is still uncertain.
Jed McCaleb: Possibly owns 12% of Mt.Gox’s shares.
Bitcoinica: Demands payment of $29 million.
Roger Ver: Claims to have lost 577 bitcoins personally.
Protos mentioned that Bitcoinica and MGIF, the two largest claimants, collectively hold about 20% of the claims. In February 2023, they agreed to receive about 70% of the payments in Bitcoin, in order to alleviate concerns about sudden sell orders. MGIF later reiterated that it would not sell Bitcoin immediately.
Currently, the price of Bitcoin has reached $68,000, compared to less than $1,000 in 2014, an increase of tens of times. With the start of a new phase of repayment, will Mt. Gox sell BTC to obtain repayment funds? Will the creditors who receive BTC repayment immediately sell their chips?
Alex Thorn, Director of Research at Galaxy, stated on the X platform that he expects most of the BTC to be held. However, K33 Research reminds cryptocurrency users that although creditors are unlikely to collectively sell the repaid bitcoins, repayment does not necessarily equate to selling pressure. Creditors may choose to continue holding, but this could be an important factor causing short-term market anxiety.
