Title: Mt.Gox to Initiate BTC and BCH Repayment: Market Concerns and Impact Clarified by Interview
On the afternoon of June 24th, Beijing time, a news about “Mt.Gox to initiate BTC and BCH repayment” quickly triggered the market, further weakening the already fragile cryptocurrency market due to concerns about potential selling pressure. At one point, BTC dropped below the $60,000 mark, and ETH approached $3,200.
However, there still exists significant confusion and rumors about the Mt.Gox repayment event itself, preventing most readers from understanding the full picture of the event and its potential impact on the market. To address these doubts, Odaily Planet Daily will clarify this information by combining market data and an interview with dForce founder Mindao in the form of a Q&A.
Q1: Is this the first time Mt.Gox has repaid its debts?
A1: No, as early as December 21, 2023, several Japanese users claimed to have received compensation in the form of Japanese yen through PayPal, including bitFlyer’s founder, Yuzo Kano. This compensation came from 7 billion yen redeemed by Nobuaki Kobayashi from the bankruptcy trust on November 17, 2023.
Q2: Why is this repayment so special?
A2: This is the first time Mt.Gox has repaid in the form of BTC and BCH, meaning that Mt.Gox’s 141,686 BTC (as well as a similar amount of BCH) will start flowing into the market. These BTC account for 0.72% of the total circulating supply of Bitcoin, valued at approximately $8.54 billion.
Q3: When will the repayment take place – when will the selling pressure arrive?
A3: According to Nobuaki Kobayashi’s latest email notification, the repayment will begin in July 2024.
Q4: The most critical question, what are the details of the repayment?
A4: Creditor Mindao stated that Mt.Gox will calculate the debt ratio of each creditor based on the price of BTC at the time of bankruptcy. Then, Mt.Gox will distribute the BTC it holds to different creditors according to their respective ratios. Considering that Mt.Gox lost approximately 650,000 BTC, and currently holds 140,000 BTC, the recovery rate in BTC terms is about 21.5%.
Q5: Why must the debt ratio be calculated based on the BTC price at that time?
A5: Essentially, this is because the amount of BTC currently held by Mt.Gox cannot cover its BTC-based liabilities, making a 1:1 physical repayment impossible. Therefore, Mt.Gox must find a price to calculate the debt ratio and allocate its current holdings. The specific price will depend on the judgment of the Japanese court during the bankruptcy case review.
Q6: What was the price of BTC at that time? Based on what?
A6: The Tokyo District Court has made a liquidation ruling on the Mt.Gox bankruptcy case, and according to Japanese bankruptcy regulations, the BTC debt value of Mt.Gox will be calculated based on the price at the time of the company’s bankruptcy in April 2014 – with a fixed debt value of 50,058.12 Japanese yen per BTC (approximately $314 at the current exchange rate). However, this price will only be used to calculate the debt ratio of the creditors, and does not mean that each BTC held by the creditors will only receive 50,058.12 yen.
Q7: How will creditors receive the repayment?
A7: Creditors have registered their receiving addresses earlier this year and will receive the repayment through exchanges such as Kraken, Bitstamp, Bitgo, etc.
Q8: What are Mt.Gox’s holdings addresses? How to monitor the movement?
A8: After the last consolidation on May 28th, Mt. Gox’s current BTC holdings are mainly stored in three addresses, each holding 47,230 BTC. The specific addresses are as follows:
1AsHPP7WcGnDLzxW2bUa2FcbJP3eZVEqpx;
16eAGJEjqsUqngMfcysQECvp7TMU37P9gX;
1HeHLv7ZRFxWUVjuWkWT2D5XFbXXvHoV68;
It is recommended to monitor these addresses using the Mt.Gox wallet interface provided by Arkham.
Q9: What are the groups that will receive the repayment? Have there been any changes in the creditor structure over the years?
A9: There have been changes. The Mt.Gox hacking incident has occurred for many years, and the related claims have been circulating in the market for a long time. Many original creditors have transferred their claims to professional bankruptcy compensation institutions due to the need to cash out as soon as possible. Alex, head of Galaxy Research, predicted that approximately 20,000 BTC claims have been acquired by bankruptcy funds, and an additional 10,000 claims belong to the exchange Bitcoinica BK.
Q10: How to assess the potential selling pressure?
A10: It depends on the selling expectations of the creditor entities after receiving the repayment. Mindao predicted that since this has been going on for ten years, the creditors are all early participants in the crypto industry, and many of the claims have changed hands over the years, so the psychological impact may be larger than the actual impact. Alex gave a similar prediction, stating that institutions that have been actively acquiring Mt.Gox are mostly high-net-worth Bitcoin holders who prefer to accumulate positions at a discount rather than engage in arbitrage through rapid trading. Alex added that considering the lower liquidity of the BCH market and the lower faith in BCH from creditors, the performance of BCH after the Mt.Gox repayment is expected to be relatively poor.