140,000 Bitcoins were transferred in 6 hours. Will Mt.Gox's compensation trigger a massive sell-off?

On the morning of May 28, a large amount of transfer suddenly appeared in the account address of Mt.Gox, an exchange that has been bankrupt for ten years. In the following six hours, Mt.Gox successively transferred out 10 transactions totaling 141,685 bitcoins, with a single transaction amount ranging from US$200 million to US$2.3 billion, worth about US$9.8 billion.

This is the first action of Mt. Gox's cold wallet address in five years. The transfer of 140,000 bitcoins worth nearly US$10 billion has attracted great attention from the community. Compared with the total increase in the number of Bitcoin ETFs today, which is 3,028, Wall Street ETF giants such as BlackRock and Grayscale each hold a total of about US$20 billion in Bitcoin. The number of bitcoins transferred from the Mt.Gox address today accounts for nearly half of the number of bitcoins held by BlackRock and Grayscale.

This huge transfer indicates that one of the most important news in the history of encryption, the Mt.Gox theft and bankruptcy incident, is about to come to an end, and the 10-year compensation process is coming to the final step.

As early as January this year, dForce founder Mindao released an email received as a creditor of Mt. Gox on Twitter. In the email, Mt. Gox confirmed the ownership of the exchange address account that had been entered as the BTC/BCH receiving address to the user, and stated that "140,000 bitcoins will be unlocked in the next two months to pay creditors." According to the latest balance sheet at the time, the exact number of bitcoins unlocked by Mt. Gox in the next two months will be 141,000.

After the incident aroused great concern in the community, BlockBeats interviewed Mindao about the transfer of 140,000 bitcoins from Mt.Gox. He said, "At the beginning of this year, creditors had registered their payment addresses and would receive tokens on exchanges such as Kraken. This time (large transfer) should be Mt. Gox preparing for the distribution of bitcoins."

In the afternoon of the same day, Mt. Gox issued an announcement to answer community questions, stating that according to the reorganization plan, the reorganization trustee is preparing to repay the claims for the allocated cryptocurrency. According to the choice of the reorganization creditors, repayment will be made either through designated cryptocurrency exchanges, etc., receiving Bitcoin and Bitcoin Cash on behalf of the reorganization creditors, or through the proceeds from the sale of Bitcoin and Bitcoin Cash.

At present, the restoration trustee has not yet begun to repay (transfer to exchanges or sell) these assets, and BTC and BCH are still in custody.

Will 140,000 Bitcoins create a "Mentougou pit"?

For the "mine" that was finally landed after several years of delay, the first reaction of some community members was panic.

Some community members released the timing of Mt. Gox liquidation lawyer Nobuaki Kobayashi's previous sale of Bitcoin. He sold 35,800 Bitcoins through over-the-counter transactions from December 2017 to February 2018 to repay users' losses, and they were all sold at high points at the time. Combined with the recent market's fatigued upward momentum, many people believe that the market may have a downward trend as a result. This morning, Bitcoin turned to fall after breaking through $70,000, with a drop of more than 3%.

Will there really be a significant sell-off after the 140,000 bitcoins are settled? As for this event itself, the market believes that "there will be some impact, but it should not be too big."

In the repayment plan provided by Mt.Gox to creditors, the repayment amount includes the "basic repayment" part and the "proportional repayment" part. The amount of the basic repayment part is the same, and the proportional repayment part can choose "mid-term repayment and final repayment" or "early lump sum repayment". Mt.Gox did not disclose the specific situation of the follow-up, which means that creditors will not receive all the compensation assets at one time.

Mindao said, "Because most creditors have sold their money to those funds, this part of the selling pressure has been hedged. And those of us who have held on to the end will definitely not sell it at this time."

Looking back over the past few years, the panic about Mt. Gox has become a "required course for retail investors" and a "scare every year" for new investors. Since Mt. Gox was ordered to compensate creditors with 140,000 bitcoins in 2019, the "Mt. Gox incident" has become a negative time bomb for several years, and the story of "the wolf is coming" has been staged, stimulating market sentiment.

Although with the passage of the Bitcoin ETF, institutions have gradually become the main force in the current cryptocurrency market, and the impact of 140,000 bitcoins on the trading market will gradually decrease. Excluding the impact of large selling pressure, there are still voices that believe that the volatility caused by fear will be greater.

Crypto KOL Riyue Xiaochu said on Twitter, "Many people use Grayscale for comparison and think it will not have an impact on the market. I don't agree... If compensation is made, the market will definitely react... Panic often lasts for a while. The real situation is that the selling pressure is not as great as imagined, so it will be a good opportunity to buy the bottom in advance."

According to an announcement previously released by Mt.Gox, the deadline for repayment of the debt of these 140,000 bitcoins is October 31, 2024.

Looking back at the "crypto earthquake" 10 years ago

The Mt.Gox bankruptcy is one of the most famous events in the history of cryptocurrency. Mt.Gox was originally created in 2010 and accounted for more than 90% of Bitcoin transactions at its peak.

In 2011, Mt.Gox was hacked for the first time, resulting in the theft of thousands of bitcoins. In 2014, Mt.Gox suddenly announced that about 850,000 bitcoins (worth about $450 million at the time) on the platform had been stolen, and then suspended all transactions and filed for bankruptcy protection. This incident caused an "earthquake" in the crypto market, with the price of Bitcoin falling from a peak of $951 that year to $309, a drop of 67%.

Since the announcement of bankruptcy and liquidation, Mt. Gox and its creditors have been in a stalemate for several years. In the following years, the price of Bitcoin continued to rise, reaching $19,000 in 2019.

In 2019, the Tokyo District Court ruled that Mt. Gox retrieved 141,000 Bitcoins and delivered them to a trust for safekeeping, and negotiated with all creditors to vote and choose a repayment plan. According to Mt. Gox's balance sheet in 2019, its debtors held approximately 142,000 BTC, 143,000 BCH and 69 billion yen (about $510 million at the time).

However, the 140,000 bitcoins confirmed in 2019 had a maximum unit price of about $10,000 at the time. Two years later, the price of bitcoin exceeded $60,000, which delayed Mt. Gox's compensation process again and again.

Related reading: "Will Mt. Gox's creditors dump the market?" "

In 2022, Mt. Gox announced that its bitcoin repayment process had been accepted by the court. Django Bits, the operator of Mt. Gox's creditor channel, said that the repayment process may "last for months or even years."

If Mt. Gox does not "dove" this time, five months later, this decade-long bankruptcy crisis involving 800,000 bitcoins will come to an end. Mt. Gox's return to the center of community attention has also caused a wave of nostalgia among OGs. Ten years ago, when Mt. Gox announced the loss of 800,000 bitcoins, Ethereum was also born during that period and gradually became the center of the crypto world. Ten years later, Bitcoin ETF and Ethereum ETF have been passed one after another, and the crypto field is moving towards the next stage.