The defunct Japanese cryptocurrency exchange Mt. Gox released an important update on its repayment timeline and procedures on Thursday. It will compensate creditors with 142,000 bitcoins (BTC) and 143,000 bitcoin cash (BCH), extending the original deadline from October 31, 2024, to October 31, 2025.
The official announcement from Mt. Gox stated that the bankruptcy trustee has essentially completed the compensation work for creditors who have completed the necessary procedures for receiving compensation and have not encountered any issues during the compensation process. However, some creditors have not yet completed the necessary procedures to receive compensation, and the deadline for compensation has been approved by the court.
Image source: Internet
Overview of Mt. Gox Repayment History
In February 2014, Mt. Gox closed due to a hacking attack, losing approximately 850,000 bitcoins, and entered bankruptcy proceedings.
From 2015 to 2018, court and bankruptcy management procedures continued, with no substantial progress in compensation during this period.
In 2019, Mt. Gox held approximately 142,000 bitcoins (BTC), 143,000 bitcoin cash (BCH), and 69 billion yen, while proposing a compensation plan, giving creditors hope for compensation.
The compensation plan originally scheduled for submission on March 31, 2020, was postponed to July 1, then further postponed to October 15 and December 15, delaying the compensation plan.
On October 20, 2021, the compensation plan was approved by the vast majority of claiming creditors.
In December 2023, Mt. Gox began debt repayments, with some users in the Japanese-speaking region receiving compensation in yen via PayPal. This was the first time Mt. Gox conducted debt repayments, but this repayment was in fiat currency rather than BTC or BCH.
In July 2024, Mt. Gox announced it would begin repaying creditors in bitcoins and bitcoin cash (BCH). The bankruptcy trustee started repaying bitcoins and bitcoin cash through designated exchanges in July. This marked the first time Mt. Gox repaid in BTC and BCH. As a result, the BTC price fell by 3%, dropping below $68,000.
Current Status of Bitcoins Held by Mt. Gox
According to tracking data from Arkham, Mt. Gox currently holds approximately 44,000 bitcoins, valued at about $2.7 billion. Although these bitcoins will continue to be used for compensating creditors in the future, the extension of the repayment deadline will further disperse the selling pressure in the market. For investors, the selling pressure on bitcoins in the short term may not be as concentrated as previously expected, which helps alleviate market concerns.
Image source: Blockchain Network
Bitcoin Selling Pressure May Be Less Than Expected
Galaxy Research Director Alex Thorn shared his analysis of the Mt. Gox compensation plan on the X platform (formerly Twitter). He believes that the selling pressure on bitcoins ultimately triggered by Mt. Gox will be less than the market's general expectations.
Thorn mentioned that individual creditors may be more willing to hold bitcoins long-term than the market expects. In fact, many creditors have repeatedly rejected relatively attractive cash offers from the compensation fund over the past few years, indicating that they prefer to receive actual bitcoins rather than compensation in dollars.
Additionally, creditors have seen the value of their recovered bitcoins increase by 140 times (in dollar terms) over the past decade, so potential capital gains tax is also one reason they are reluctant to sell easily. As the price of bitcoin rises, even if only a portion of bitcoins is recovered, the actual asset value for individual creditors has significantly increased, which may encourage them to prefer long-term holding rather than selling.
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