Will Mt. Gox rehabilitation lead to Bitcoin dump?
Although the now defunct cryptocurrency exchange Mt Gox closed its doors in 2014, the saga is far from over. In fact, Nobuaki Kobayashi, the trustee appointed to oversee the distribution of the Mt Gox creditor-owed Bitcoin supply, is still in receipt of more than $1 billion worth of BTC. As a result, many fear that its eventual sell-off could lead to another sharp decline in Bitcoin’s value.
When the exchange first filed for bankruptcy, they claimed that they had been the victim of an industrial sized hack to the region of 850,000 BTC. At the time, that amounted to roughly $460 million. During Bitcoin’s all-time of $20,000 in late-2017, this would have stood at more than $17 billion. However, Mt Gox later claimed that they had managed to recover approximately 200,000 BTC, which it planned to allocate to customers that were victims of the hack.
The distribution exercise begun late last year, with the sell-off peaking in February 2018, whereby Kobayashi off-loaded 18,000 BTC. 24 hours prior to the sale, Bitcoin was hovering just above the $9,300 mark; two days later it briefly touched $6,100. At the time, many argued that this was the cause of the 9-figure dump.
At the time of writing, court-appointed Kobayashi still has in the region of 160,000-170,000 BTC at his disposal. Based on current prices of $6,300, this amounts to a market value of well over $1 billion. Any impending sell-off of significant size could once again hurt Bitcoin, especially when one considers the current lack of demand in the market.
Those who were affected by the Mt Gox collapse will no doubt see the Kobayashi distribution as good news. Rightly so, as they have effectively had their Bitcoin holdings restricted for the best part of four years. Moreover, at the time of the bankruptcy filing, the price of Bitcoin was significantly lower than it is today.
Nevertheless, it is understood that the sell-off will not begin immediately, or at least during 2018. The Japanese court that appointed Kobayashi has requested that the trustee submits a new distribution plan before February 14th, so the markets might get some rest-bite momentarily.
To what extent the sell-off effects the wide marketplace remains to be seen. While a bear market could amplify the downfall, a stronger market might help soften the blow. On the other hand, some commentators argue that Kobayashi must implement a more responsible distribution model, insofar that the volume of each sale must not exceed levels that is likely to lead to a domino effect sell-off. However, those who have waited for their pay-out since 2014 might not appreciate such a conservative approach.
If you were affected by the Mt Gox bankruptcy and are yet to make a claim, you have until October 2nd 2018 to file one.