Mt. Gox shut down in 2014 after a hack that was said to have cost users and the company billions of dollars in bitcoin. However, the bankruptcy court has mandated the company to begin repaying its debt to the users, which is not good for the investors.
At the time of the 2014 heist, which saw the theft of around 900,000 tokens, the value stood at $9 billion. However, adjusting to the price growth of the coin, the current worth of the coins stands at around $58 billion to $60 billion.
After a series of delays and legal issues following the protracted bankruptcy process, the crypto exchange can now make users whole with their funds.
In a court hearing on Monday, the court-appointed trustee overseeing Mt. Gox’s bankruptcy case announced that the exchange will begin distribution to its approximately 20,000 creditors early this July. The fund disbursement will be a mix of bitcoin and bitcoin cash.
The Mt.Gox Reimbursement Impact on Bitcoin
To victims of the 2014 Mt. Gox hack, this is great news. But on a larger scale, it is not looking good for Bitcoin investors as the coin fell to $59,000 last week. The question is, what will happen to the value of Bitcoin when over 141,000 Bitcoins return to the Mt. Gox victims this week?
Then comes the high probability of investors just cashing out and running after seeing the value of their coins 10,000x in the last decade–that is for users who opt for reimbursement in Bitcoin and not the cash equivalent.
During the February 2014 Mt. Gox heist, bitcoin had a value of $600/coin. As of Monday, bitcoin is trading at around $62,000/coin.
For many of the victims now turned successful investors, having their assets stuck in Mt. Gox has been their best investment ever. But bitcoin investors are worried about the impact of this magnitude will have on the crypto market.
Assuming most of the liquidation by Mt. Gox creditors takes place in July, this creates a trajectory where crypto prices come under further pressure in July, but start rebounding from August onwards.
Crypto Analysts
Although Bitcoin has seen a successful rise to its peak at $70,000 earlier this year, similar issues of market flooding caused its recent price dives. Last month, the crypto exchange Gemini reimbursed over $2 billion worth of bitcoins to customers who have their funds stuck in its Earn lending program, which suspended withdrawals in November 2016. These investors will mark a 230% recovery after Bitcoin tripled in value since 2016.
Also, in a separate case last month, the German government sold 5,000 bitcoins worth $310 million out of a 50,000 pile seized in connection with the movie piracy operation Movi2k.
However, analysts suggest that losses in bitcoin are likely short-term, as analysis shows that most of Mt.Gox’s early users and creditors are long-term bitcoin enthusiasts who are not likely to sell all of their bitcoin at once.