Original | Odaily Planet Daily
Author | Azuma
On the afternoon of June 24th Beijing time, a quick announcement about “Mt.Gox will start repaying BTC and BCH” quickly sparked the market, causing further setbacks to the already weak cryptocurrency market due to concerns about potential selling pressure. BTC once fell below the $60,000 mark, and ETH also approached $3,200.
However, there is still a great deal of confusion and even rumors about the Mt.Gox repayment event on the market, so most readers do not yet understand the full picture of the event and cannot actively assess its potential impact on the market. To dispel these doubts, Odaily Planet Daily will use market data and interviews with creditors (dForce founder Mindao) to clarify the information in a Q&A format.
Q1: Is this the first time Mt.Gox has repaid its debts?
A1: No, as early as December 21, 2023, several Japanese-speaking users claimed on social media that they had received compensation in the form of Japanese yen through PayPal, including the founder of the top Japanese exchange bitFlyer, Yuzo Kano. According to an email notification from the bankruptcy trustee Nobuaki Kobayashi, part of the compensation funds came from 7 billion yen redeemed by Kobayashi from the bankruptcy trust on November 17, 2023.
Q2: Why is this repayment so special?
A2: This is the first time Mt.Gox has repaid in the form of BTC and BCH, meaning that the 141,686 BTC (as well as a similar amount of BCH) held by Mt.Gox will begin to flow into the market. These BTC account for 0.72% of the total Bitcoin supply, worth approximately $8.54 billion.
Q3: When will the repayment take place – when will the selling pressure come?
A3: According to the latest email notification from Nobuaki Kobayashi, the repayment will begin in July 2024.
Q4: The most crucial question, what are the details of the repayment?
A4: Creditor Mindao stated that Mt.Gox will calculate the percentage of the creditors’ claims based on the price of BTC at the time of the bankruptcy, and then distribute the BTC it holds to different creditors according to their percentage. Considering that Mt.Gox lost about 650,000 BTC in total, and still holds 140,000 BTC, this means that the recovery rate in BTC terms is about 21.5%. In simple terms, if you held 100 BTC at Mt.Gox, you can only receive about 21.5 BTC now, which is a significant drop in terms of BTC, but considering the hundredfold increase in the value of BTC in recent years, it is a huge profit in fiat terms (essentially passive locking).
Odaily note: Regarding the specific losses of the Mt.Gox hacking incident, the exchange initially declared that 850,000 BTC were lost (750,000 belonging to customers, 100,000 to the platform), but later Mt.Gox stated that it had found 202,185 BTC in the system that had been considered stolen, so the loss should be 650,000 BTC.
Q5: Why must the creditor ratio be calculated based on the BTC price at the time?
A5: Essentially, it is because of the insolvency. The amount of BTC currently held by Mt.Gox cannot cover its BTC-based liabilities, so it is not possible to repay in physical form at a 1:1 ratio. This means that Mt.Gox must find a price to calculate the percentage of the creditors’ claims and then distribute its current holdings accordingly. The specific price depends on the ruling made by the Japanese court when reviewing the bankruptcy case.
Mindao also added that at the time of the Mt.Gox exchange, users did not only hold BTC, but also fiat assets, so Mt.Gox had to choose a currency to use as the basis for the calculation – in fact, Mt.Gox used the Japanese yen price as the basis.
Q6: What was the price of BTC at the time? What was it based on?
A6: The Tokyo District Court has already made a liquidation ruling on the Mt.Gox bankruptcy case. According to Japanese bankruptcy law, the value of Mt.Gox’s BTC claims will be calculated based on the price at the time of the company’s bankruptcy in April 2014 – a fixed value of 50,058.12 yen per BTC (approximately $314 at the current exchange rate). However, this price will only be used to calculate the percentage of creditors’ claims, and does not mean that each BTC held by creditors can only receive 50,058.12 yen. In fact, the final amount that each BTC can receive through the claim percentage repayment will be much higher than this number.
Mindao added that in June 2011, when Mt.Gox was hit by a hacker attack, the price of BTC on the Mt.Gox platform dropped to a low of $150, while the market price at the time was around $300, which means that users who bought BTC at a low price on Mt.Gox at that time can achieve the maximum compensation “profit”.
Q7: How will creditors receive the repayment?
A7: Earlier this year, creditors registered their payment addresses and will receive the repayment through exchanges such as Kraken, Bitstamp, and Bitgo.
Q8: What are Mt.Gox’s holding addresses? How are they monitored for movement?
Q8: After the last consolidation on May 28th, the BTC currently held by Mt.Gox is mainly stored in three addresses, each holding 47,230 BTC. The specific addresses are as follows:
1AsHPP7WcGnDLzxW2bUa2FcbJP3eZVEqpx;
16eAGJEjqsUqngMfcysQECvp7TMU37P9gX;
1HeHLv7ZRFxWUVjuWkWT2D5XFbXXvHoV68;
It is recommended to use the Mt.Gox wallet interface provided by Arkham for monitoring.
Q9: What are the groups that will receive repayment? Have there been any changes in the structure of the debts over the years?
A9: There have been changes. The Mt.Gox hacking incident occurred many years ago, and the related debts have been circulating in the market for a long time. Many original creditors have sold their debts to professional bankruptcy claims institutions due to the need to cash out as soon as possible. Galaxy Research Director Alex estimated that about 20,000 BTC claims have been purchased by bankruptcy funds, and there are also 10,000 claims owned by the exchange Bitcoinica BK.
Q10: How to evaluate the potential selling pressure?
A10: It depends on the expected selling of the creditors after receiving the repayment.
Mindao predicted on this issue that this incident has been going on for ten years after all, and the creditors are all early participants in the cryptocurrency circle (diamond hands), and many of the debts have changed hands during this period, so I think the psychological impact may be greater than the actual impact.
Alex gave a similar prediction. Most of the institutions that have been actively buying Mt.Gox are high-net-worth Bitcoin holders, and they prefer to accumulate positions at a discounted price rather than engage in quick trading arbitrage.
Alex also added that considering the lower liquidity of the BCH market and the fact that creditors have less faith in BCH compared to BTC, it is expected that the performance of the market after Mt.Gox repayment will be relatively poor.
