Failed Cryptocurrency Exchange Mt. Gox Is Trying To Repay Its Customers After More Than a Decade
Thomas Trutschel / Photothek via Getty Images
Key Takeaways
-
Failed bitcoin exchange Mt. Gox will begin returning assets to customers in July 2024, more than a decade after it was hacked.
-
The number of bitcoins headed toward former customers is still not certain and could range from 65,000 to as much as 140,000, worth nearly $9 billion at the upper end.
-
Some bitcoin holders are worried the distribution could lead to an increase in selling pressure.
-
The price of bitcoin dipped below $61,000 on the news, continuing a downward trend for the month.
Failed bitcoin exchange Mt. Gox will finally begin returning bitcoin (BTCUSD) to customers in July 2024, almost a decade after a massive hack forced it into bankruptcy.
The number of bitcoins headed toward former customers is still not certain and could range from 65,000 per one estimate to as much as 140,000 based on addresses connected to Mt. Gox, which at the upper end could be worth nearly $9 billion.
That sudden supply hitting the markets has bitcoin investors worried about lower prices. Bitcoin, while on the downtrend in general, slid further Monday to below $61,000 as of noon ET.
What Happened To Mt. Gox?
Mt. Gox, which once accounted for roughly 70% of the world’s bitcoin trading, was hacked multiple times between 2011 and 2014 and thousands of bitcoins went missing, setting off a long process of customers trying to get their crypto or money back. The exchange declared bankruptcy in 2014.
The long-awaited distribution of Mt. Gox customer funds comes after years of delays; however, Rehabilitation Trustee Nobuaki Kobayashi stated that preparations for these repayments are well underway, ensuring all necessary safety measures are in place before the distribution commences.
In addition to bitcoin, former customers will also receive Bitcoin Cash, as the alternative cryptocurrency was launched as a “hard fork” of bitcoin in 2017, which means all bitcoin holders at the time received an equivalent amount of Bitcoin Cash. This development follows a substantial transfer of over 140,000 bitcoin from cold wallets to an unknown address in May, marking the first movement in five years.
Why Is the Repayment Making Crypto Investors Nervous?
The impending repayments are anticipated by some to exert selling pressure on both bitcoin and Bitcoin Cash markets.
“That’s like over half of all the ETF inflows being negated in one shot,” posted Eric Balchunas, Senior ETF analyst at Bloomberg Intelligence. Demand created by inflows into spot bitcoin ETFs have been credited with a sharp run up in bitcoin prices since they started trading on Jan. 11. So far, those products have amassed more than $14.5 billion in net inflows.
Early investors receiving these assets, especially those who entered the market before 2013, may be tempted to sell part of their holdings due to the significant increase in value since their initial investment.
However, the potential sell pressure on bitcoin created by this event could be overblown, Altana Digital Currency Fund CIO Alistair Milne said. “Mt Gox creditors in need of funds (i.e. weak hands) have had ~10 years to sell their claims,” Milne posted on X. “There are no distressed/urgent sellers left.”
Read the original article on Investopedia.