The Mt. Gox crypto exchange hack of 2014 left many creditors waiting nearly a decade for a portion of their money back. Now, two of the biggest creditors of Mt. Gox have elected to get their bankruptcy recovery paid out mostly in bitcoin (BTC), according to people familiar with the matter.
Bitcoinica and MtGox Investment Funds (MGIF) – which together represent about a fifth of all Mt. Gox claims – will get paid 90% of their collectable funds (which are calculated at approximately 21% of what they had locked on the platform at the time of the hack). This move could soothe longstanding fears among bitcoin holders that a wave of simultaneous liquidations tied to Mt. Gox bankruptcy recoveries could drive down the price of bitcoin.
The payouts will come in as part of the early lump sum option offered to creditors, now expected on Sept. 30, though the Japanese trustee overseeing the repayment process has a history of kicking the can on past deadlines. Creditors have until March 10, 2023, to decide whether to take the offered early lump sum or keep waiting for a potentially larger payout at an undetermined date in the future.
The decision by Bitcoinica and MGIF to opt for the early payout in bitcoin could be seen as a “bird in the hand” move, as it removes a significant portion of the total claim from any future battle. It also removes the need for the trustee overseeing the bankruptcy estate to sell off a significant portion of Mt. Gox’s recovered bitcoin holdings to fulfill all the fiat requests.
The price of BTC jumped after CoinDesk reported this development, topping $25,000 for the first time since June. This could be seen as a sign of confidence in the market that the Mt. Gox payouts won’t torpedo bitcoin’s price.
The Mt. Gox hack of 2014 was a major blow to the crypto industry, but the decision by Bitcoinica and MGIF to opt for the early payout in bitcoin could be seen as a sign of confidence in the market. It also removes the need for the trustee overseeing the bankruptcy estate to sell off a significant portion of Mt. Gox’s recovered bitcoin holdings to fulfill all the fiat requests, which could have had a negative impact on the price of bitcoin.