On-chain data indicates that the first payments have begun, but it remains unclear when the coins will be distributed to investors.
The shuttered bitcoin exchange Mt. Gox is sending ripples through the market as businesses and individuals prepare to receive compensation, nearly a decade after the platform collapsed.
The regulator overseeing Mt. Gox's payment plan is set to hand out a large distribution of 142,000 bitcoin and bitcoin cash to users who lost funds when the platform was last hacked in July 2014. The current payment is set aside for creditors who agreed to give up 10% of their holdings in exchange for receiving early payment before the completion of civil proceedings, with CoinShares recently estimating that there will be 75,000 coins in circulation.
News that Mt. Gox will refund 2014 coins lost on the exchange has sent cryptocurrency prices soaring.
Bitcoin has lost 20% of its value in the past month and is currently trading at $55,248, while Ethereum has fallen below the $3,000 level and is trading at $2,950, down 20% in the past 30 days.
Coin circa 2014
Most analysts agree that the sell-off plaguing the market was sparked by the Mt. Gox payout and the possibility of tens of thousands of coins flooding into the market.
When the platform went down in July 2014, the price of Bitcoin was $600, meaning that at today's value, investors could potentially make a 10,000% profit.
Still, some are happy the cryptocurrency market will be free from the ever-looming threat.
“The resurgence of Mt Gox Coin is causing FUD today and may weaken BTC in the short term, but it will be positive in the long term. Fears of Mt Gox Coin hitting the market have been looming for a long time and this just removes one more risk to the long term success of BTC,” said Renick Parry, founding partner at early stage VC firm Stratos.
Target companies
The five companies eligible to receive the Mt. Gox-era coins are Bitstamp, Bitgo, Kraken, Bitbank and SBI VC Trade, who will be tasked with redistributing the payments to individuals who suffered losses in the initial bankruptcy.
However, details remain unclear as to which companies will receive tokens first and how they will distribute the cryptocurrency they receive, despite a June 24 notice from the trustee responsible for disbursing Mt. Gox's funds saying that the funds would begin flowing in early July.
On July 4, PeckShield warned that an address linked to Mt. Gox had sent a massive 47,000 BTC (worth $2.7 billion) to a new address, plus another 1,544 BTC (worth $84 million) to the aforementioned Bitbank. The next day, Mt. Gox sent another 1,200 BTC (worth $64 million) to the new address.
While Bitbank has not acknowledged the payments, the company has begun moving these funds around within its wallets, according to data from Arcam Intelligence. Wallets linked to the Japanese company recorded large amounts of Bitcoin transfers over the weekend, ranging from less than 1 BTC to as much as 90 BTC.
Concerns that recipients of the funds may sell their coins have weighed on the market, although some analysts say not everyone will.
“While a large portion of the refunded tokens will undoubtedly be sold, we expect veteran whales to continue investing in the face of the upcoming bull market,” said Philip Alexeyev, chief growth officer at CrossFi. He told Defiant that investors have been getting by without this money for years and can wait until they have maximized their returns “unless they are in a desperate situation.”
