On the morning of May 28th, Mt.Gox, the bankrupt exchange, suddenly had a large withdrawal record from its account address. Over the next six hours, Mt.Gox transferred a total of 141,685 bitcoins in 10 transactions, ranging in value from $200 million to $2.3 billion, with a total value of approximately $9.8 billion.
This is the first action in five years from Mt. Gox’s cold wallet address, and the transfer of nearly 14,000 bitcoins worth nearly $100 billion has attracted high attention from the community. Compared to today’s total increase in the number of bitcoins in Bitcoin ETF, which is 3,028, major Wall Street ETF giants like BlackRock and Grayscale have a total bitcoin holding of around $20 billion each. The amount of bitcoins transferred from Mt.Gox’s address yesterday accounts for nearly half of the total bitcoins held by BlackRock and Grayscale.
This massive transfer indicates that one of the most significant news in crypto history, the Mt.Gox theft and bankruptcy, is nearing its end, and the 10-year compensation process is reaching its final stages.
As early as January of this year, dForce founder Mindao posted an email he received as a Mt.Gox creditor on Twitter. In the email, Mt.Gox confirmed the ownership of the exchange address accounts entered by users as the receiving addresses 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 141,000 bitcoins from Mt.Gox. He said, “At the beginning of this year, the creditors had already registered their receiving addresses, and they will receive tokens on exchanges like Kraken. This large transfer is probably Mt.Gox’s preparation for bitcoin distribution.”
In the afternoon of the same day, Mt.Gox released an announcement to address community concerns, stating that the reorganization trustee is preparing for the distribution of the cryptocurrency claims as part of the restructuring plan. Depending on 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.
Currently, the rehabilitation trustee has not yet started to repay (transfer to exchanges or sell) these assets, and BTC and BCH are still in custody.
Will the 140,000 bitcoins cause the “Mt.Gox pit”?
The initial reaction of some community members to the long-awaited “thunderbolt” was panic.
Some community members pointed out the timing of Mt.Gox’s liquidation by lawyer Nobuaki Kobayashi, who had sold 35,800 bitcoins between December 2017 and February 2018 through over-the-counter transactions to repay users’ losses, selling them at the peak. Combining with the recent tired upward trend in the market, many people believe that the market may experience a downward trend as a result. Bitcoin fell this morning after breaking $70,000, with a decline of over 3%.
Will the repayment of 140,000 bitcoins really cause significant selling pressure? Regarding this event itself, the market believes that “there will be some impact, but it should not be too significant.”
In the repayment plan provided by Mt.Gox to creditors, the repayment amount includes a “basic repayment” part and a “proportional repayment” part. The amount of the basic repayment part is the same, and the proportional repayment part can choose between “mid-term and final repayment” or “early one-time total repayment.” 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 said, “Because most creditors have already sold their money to those funds, the selling pressure has already been offset. And for those of us who have been holding until the end, we definitely won’t sell at this time.”
Looking back over the past few years, the panic surrounding Mt.Gox has become a “must-learn lesson” for retail investors and a “yearly scare” for newbies. Since Mt.Gox was ordered to compensate creditors with 140,000 bitcoins in 2019, the “Mt.Gox incident” has become a timed negative bomb, with the story of “the wolf is coming” constantly unfolding and 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. Excluding the impact of significant selling pressure, some believe that the volatility caused by fear will be more significant.
Cryptocurrency KOL Ruyue 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 while. But the selling pressure is not as significant as imagined, so it will be a good opportunity to buy in advance.”
According to a previous announcement by Mt.Gox, the deadline for repaying the debt of these 140,000 bitcoins is October 31, 2024.
Looking back at the “cryptocurrency earthquake” ten years ago
The Mt.Gox bankruptcy was one of the most famous events in cryptocurrency history. 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 attacked by hackers, resulting in the theft of thousands of bitcoins. By 2014, Mt.Gox suddenly announced that approximately 850,000 bitcoins (worth around $450 million at the time) were stolen from the platform, leading to the suspension of all trading and the filing of bankruptcy protection. This incident caused an “earthquake” in the crypto market, with the price of bitcoin dropping from its highest point of $951 to $309, a decline of 67%.
Since the declaration of bankruptcy liquidation, Mt.Gox has been in a prolonged tug-of-war with creditors for several years. Over the following years, the price of bitcoin continued to rise, reaching $19,000 in 2019.
In 2019, the Tokyo District Court ruled that Mt.Gox should recover 141,000 bitcoins for delivery to a trust for safekeeping and negotiated for all creditors to vote on the compensation plan. According to Mt.Gox’s 2019 balance sheet, the debtor held about 142,000 BTC, 143,000 BCH, and 69 billion yen (approximately $510 million at the time).
However, the 140,000 bitcoins determined in 2019 had a highest price of around $10,000 at the time, and two years later, the price of bitcoin surpassed $60,000, causing further delays in Mt.Gox’s compensation process.
In 2022, Mt.Gox announced that its bitcoin repayment process had been accepted by the court, and Django Bits, the operator of the Mt.Gox creditor channel, stated that the repayment process could “last for months or even years.”
If Mt.Gox doesn’t “pigeonhole” this time, five months later, this decade-long bankruptcy involving 800,000 bitcoins will finally come to an end. Mt.Gox’s return to the center of community attention has also sparked 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 moved to the center of the crypto world. Ten years later, with the successive approval of Bitcoin ETFs and Ethereum ETFs, the crypto field is moving towards the next stage.
