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Trustees of Mt. Gox, Japanese Bitcoin The exchange that closed down ten years ago, Friday said The company has started paying some creditors in Bitcoin and Bitcoin Cash.
The announcement added that repayments will be made “immediately” if other users of the hacked exchange meet certain conditions, including accepting account verification and subscribing to one of the designated digital asset exchanges through which the bankruptcy estate Digital tokens are used to facilitate payments.
“We are asking eligible creditors to wait for a period of time,” the statement continued.
Bitcoin prices have plunged nearly 6% in the past 24 hours.
Clients of the Tokyo-based exchange have been waiting 10 years to get their funds back.
What is Mt.Gox?
Once the world’s largest cryptocurrency trading venue, Mt. Gox filed for bankruptcy in February 2014 after a series of robberies that left as many as 950,000 Bitcoins (worth more than $58 billion) disappeared.
Mt. Gox blames the disappearance of Bitcoin on a bug in the cryptocurrency framework. Mt. Gox said that while users received incomplete transaction messages when accessing the exchange, tokens may have actually been illegally transferred from their accounts by hackers.
After declaring bankruptcy, 140,000 lost Bitcoins were recovered – meaning that at today’s prices, approximately $9 billion worth of Bitcoins would be returned to their owners. Bitcoin was trading around $600 at the time of the bankruptcy. Today, it’s worth more than $54,000 — an increase of almost 9,000 percent.
On Thursday and Friday, Mt. Gox moved billions of dollars in Bitcoin from its crypto wallets ahead of the issuance of a repayment memorandum, according to data from Arkham Intelligence.
More than 47,000 bitcoins worth $2.7 billion have been removed from offline cryptocurrency wallets linked to Mt. Gox, Arkham Intelligence said on Friday.
According to Arkham, some of the funds worth $84.9 million were sent to Japanese cryptocurrency exchange Bitbank, which is listed as one of the platforms supporting repayments from Mt. Gox users. Another $63.6 million in Bitcoin was sent to an unknown counterparty, which Arkham said “may be a listed repayment exchange.”
According to Arkham, the Mt.Gox wallet continues to hold 138,985 Bitcoins, worth approximately $7.5 billion at current prices, meaning billions of dollars worth of cryptocurrency have yet to be disbursed.
How will this affect Bitcoin?
Analysts previously told CNBC they The Mt. Gox repayment plan is expected to lead to a massive sell-off in Bitcoin, although this may be short-lived and lead to further price gains later this year and early 2025.
John Glover, chief investment officer of crypto lending company Ledn, told CNBC that windfalls from Mt. Gox users could translate into huge sales of Bitcoin as investors seek to lock in gains.
“A lot of people will obviously cash out and enjoy the fact that their assets are stuck in the Mt. Gox bankruptcy and it’s the best investment they’ve ever made,” said Glover, a former managing director at Barclays. . “Some people will obviously choose to take the money and run,” he said in emailed comments.
JPMorgan analysts said in a report last month that they expected Mt. Gox customers to sell some of their bitcoins to profit from the cryptocurrency’s huge gains.
“Assuming the majority of the liquidation of Mt. Gox’s creditors occurs in July, (this) would create a trajectory where cryptocurrency prices come under pressure in July but rebound from August,” they wrote.
Ultimately, the total amount owed to creditors (approximately 140,000 Bitcoins) represents approximately 0.7% of the total 19.7 million Bitcoins currently in circulation.
Analysts said this means that despite the possible impact on prices, there is still enough liquidity to cushion the blow of any sharp sell-off.
James Butterfill, director of research at CoinShares, told CNBC that billions of dollars worth of Bitcoin have been traded every day on trusted exchanges this year, indicating that “liquidity is sufficient to absorb these sales in the summer.”
CCData research analyst Jacob Joseph agreed, saying the market is fully capable of absorbing selling pressure.
“Additionally, most creditors are likely to take a 10% haircut on their holdings in order to be repaid early, and not all holdings will be liquidated in the open market, easing overall selling pressure,” he told CNBC. e-mail.
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