Mt. Gox Initiates Decade-Delayed Bitcoin Repayments, Sparking Market Volatility

Mt. Gox, the once-dominant cryptocurrency exchange that collapsed in 2014, has begun repaying creditors in Bitcoin (BTC) and Bitcoin Cash (BCH) after a decade-long wait. The rehabilitation trustee announced on Friday that payments have started through designated cryptocurrency exchanges, marking a significant milestone in one of the crypto industry’s most notorious bankruptcies.

The Tokyo-based exchange, which once handled 70% of global Bitcoin transactions, filed for bankruptcy in 2014 after losing approximately 850,000 BTC to a security breach. With Bitcoin’s value skyrocketing since then, the repayment plan involves returning about 140,000 recovered BTC, worth around $9 billion at current prices.

Nobuaki Kobayashi, the rehabilitation trustee, stated that further repayments would be “promptly made” to eligible creditors who meet certain conditions. These include account verification and subscription to designated exchanges facilitating the disbursements.

The commencement of repayments was preceded by significant on-chain activity. Blockchain intelligence firm Arkham reported that Mt. Gox moved 47,228 BTC (approximately $2.71 billion) from cold storage to a new wallet. Some of these funds were transferred to exchange hot wallets, including $84.9 million to Japanese crypto exchange Bitbank.

The news of Mt. Gox’s repayments has coincided with a sharp decline in Bitcoin’s price, which fell nearly 6% in 24 hours, dropping below $54,000. This volatility has led to over $580 million in liquidated long positions across the crypto market.

Analysts are divided on the long-term impact of these repayments. While some expect heavy selling pressure in the short term as creditors cash out their long-held assets, others believe the market has sufficient liquidity to absorb the potential sell-off. JPMorgan analysts suggested that most liquidations might occur in July, with prices potentially rebounding from August onwards.

The Mt. Gox saga serves as a reminder of the crypto industry’s turbulent history and the ongoing challenges in resolving major exchange failures. As the repayment process unfolds, the crypto market will be closely watching for any significant impacts on Bitcoin’s price and overall market dynamics.