It has been a long road for the creditors of Mt. Gox, the Japanese bitcoin exchange that went bankrupt after a major hack 10 years ago. Up to 950,000 bitcoin were lost in the 2011 hack, with only 140,000 of those coins being recovered. However, at today’s prices, the recovered coins are worth a staggering $9 billion, providing a windfall for those who have patiently waited for their repayment.
Among the claimants is Gregory Greene, an Illinois native who filed a class action lawsuit against Mt. Gox and its former CEO after his account was frozen. Greene estimated that his lost bitcoin, which was valued at $25,000 at the time of the hack, would now be worth around $2.5 million, representing a 10,000% gain. While the exact amount each creditor will receive in the payouts remains unclear, the distributions are expected to begin in July, according to the court-appointed trustee overseeing the bankruptcy proceedings.
Once the largest spot bitcoin exchange in the world, Mt. Gox was a pioneer in the cryptocurrency space, handling around 80% of all global dollar trades for bitcoin at its peak. However, a series of heists led to the exchange’s downfall in 2014, with Mt. Gox blaming a bug in the cryptocurrency’s framework for the disappearance of the bitcoin. Despite the setbacks, the creditors remained hopeful that they would eventually be repaid for their losses.
John Glover, chief investment officer of crypto lending firm Ledn, described the upcoming repayments as a historic windfall for Mt. Gox creditors. Many creditors are expected to cash out their bitcoin holdings, considering their investment in the bankrupt exchange as one of the best they have ever made. However, there is still uncertainty regarding the impact of the massive payouts on the cryptocurrency market, with analysts warning of potential downside risks in the short term.
While some creditors may choose to sell their bitcoin holdings to lock in their gains, others are likely to hold onto their assets, believing in the long-term potential of the cryptocurrency. Galaxy Digital’s head of research, Alex Thorn, noted that most creditors are inclined to take their payouts in cryptocurrency rather than fiat, with many of the top claimants being well-known figures in the bitcoin community. However, there are concerns about the potential market impact if a significant portion of the distributed bitcoin is sold.
Tax considerations are also a key factor for Mt. Gox creditors when deciding whether to accept their disbursements in cryptocurrency. Luke Nolan, ethereum research associate at CoinShares, pointed out that the tax consequences of liquidating their holdings may deter some creditors from selling their bitcoin. In jurisdictions with capital gains tax, creditors may explore alternative strategies to monetize their bitcoin assets without triggering a substantial tax bill.
As Mt. Gox creditors prepare to receive their long-awaited repayments, the cryptocurrency market is bracing for potential fluctuations in prices. While the liquidation of bitcoin holdings by creditors could lead to short-term selling pressure, analysts anticipate a rebound in crypto prices in the months following the payouts. The true believers who have held on to their Mt. Gox claims for a decade may finally see their patience rewarded as they receive their share of the recovered assets.