Key Takeaways:
Mt. Gox, a once prominent and now-defunct Japanese cryptocurrency exchange is preparing to distribute a significant amount of digital assets including Bitcoin (BTC) and Bitcoin Cash (BCH), amounting to over $9 billion, to customers.
However, leading crypto analytics firm K33 Research says that the event could negatively impact the value of BTC, putting the possibility of a rally higher in jeopardy.
Mt. Gox Trustee to Payout Over $9 Billion in Bitcoin to 2014 Hack Victims
As per a report published on Tuesday, Mt. Gox, which shut down in 2014 due to a hack, is gearing toward distributing approximately 142,000 BTC worth roughly $9.5 billion and 143,000 BCH worth $73 million to its creditors.
K33 analysts Anders Helseth and Vetle Lunde warned the influx of coins from the exchange could become a “relevant negative price contributor” for Bitcoin’s valuation in the coming weeks.
Recently, some of Mt. Gox’s creditors saw their BTC and BCH claims being updated in its claim filing system. Trustees assigned to the defunct exchange said last year that they had set an October 31st, 2024 deadline to reimburse creditors.
Customers received a similar update last month on their cash repayments that included information such as the number of digital tokens that needed to be returned and deadlines for repayments. Some creditors said they got the money transferred into their accounts.
Experts Ask Crypto Investors to be Cautious Over the Next Few Weeks
K33 said if Mt. Gox’s crypto payout process is similar to its fiat refunds, then customers could start receiving their crypto refunds as soon as next month. While it’s unlikely that creditors will sell their payouts en masse, the anticipation of such an event has prompted market players to stay cautious and avoid taking too many risks, the analysts wrote.
Market observers remain divided on the potential impact of the Mt. Gox payout on Bitcoin’s price. Some believe that creditors may choose to hold on to their funds, while others fear the sheer volume of tokens possibly entering the market could trigger a huge sell-off that would create a downturn in prices.
The situation surrounding Mt. Gox does not seem to affect the market as it continues to show resilience in the face of external pressure. However, K33 Research analysts have advised crypto investors to closely monitor developments related to the distribution process to mitigate any adverse effects on their portfolios.
Mt. Gox Once Handled 70% of all Global Bitcoin Transactions
At its peak, Mt. Gox handled 70% of all Bitcoin transactions globally and was considered the world’s largest Bitcoin exchange platform. However, it all came crashing down in 2011 when the exchange was hacked, leaving many investors with significant amounts of their BTC lost or stolen. The exploit temporarily sent Bitcoin’s price to almost zero.
Mt. Gox declared bankruptcy three years later. Nearly 750,000 BTC worth over $50 billion in today’s money was stolen from the platform.
Arkham Intelligence reports that the bankrupt crypto exchange still holds about 137,892 BTC valued at around $9.2 billion. The company also has BCH and fiat money under its reserves, which are being used for the payout.
Adam Back, CEO of blockchain infrastructure firm Blockstream, told Bloomberg that he has received updates on the number of tokens that will be returned and is now waiting for the payout date.
The Mt. Gox trustee stated that creditors should receive base, intermediate, and early lump-sum payments before the October 31st deadline.
At the time of writing, Bitcoin (BTC) is trading at $66,929 – up nearly 1% in the last 24 hours. The world’s largest cryptocurrency was worth just $1,000 a piece when Mt. Gox declared bankruptcy.
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