Mt.Gox token repayments start in July, here are some things you need to know in advance

Original title: "Ten Questions and Ten Answers, Breaking the Mt.Gox Rumor Fog"

Original author: Azuma, Odaily Planet Daily

 

On the afternoon of June 24th, Beijing time, a piece of news about "Mt.Gox will start BTC and BCH repayments" quickly triggered the market. Due to concerns about potential selling pressure, the already weak cryptocurrency market was further frustrated. BTC once fell below the $60,000 mark, and ETH also approached $3,200.

 

However, there is still a lot of confusion and even rumors about the Mt.Gox repayment incident itself, so that most readers do not understand the full picture of the incident, and thus cannot actively assess the potential impact of the incident on the market. In order to eliminate these doubts, Odaily Planet Daily will combine market data and interviews with creditors (dForce founder Mindao) to clarify this information in the form of questions and answers.

 

Q1: Is this the first time that Mt.Gox has made a debt repayment?

 

A1: No, as early as December 21, 2023, several Japanese-speaking users posted on social media that they had received compensation in Japanese yen through PayPal, including Yuzo Kano, the founder of Japan's leading exchange bitFlyer.

 

Combined with the email notice from Nobuaki Kobayashi, the then Mt. Gox bankruptcy liquidator, it can be seen that this part of the compensation funds came from the 7 billion yen redeemed by Nobuaki Kobayashi from the bankruptcy trust on November 17, 2023.

 

Q2: Why is this repayment so special?

 

A2:Because this is the first time that Mt.Gox has repaid in the form of BTC and BCH, it means that the 141,686 BTC (and a roughly equal amount of BCH) held by Mt.Gox will begin to flow into the market.

 

These BTC account for 0.72% of the total supply of Bitcoin in circulation, worth approximately $8.54 billion.

 

Q3: When will the repayment be made - when will the selling pressure come?

 

A3:According to the latest email notification from Nobuaki Kobayashi, repayment will begin in July 2024.

 

 

Q4: The most critical question is, what are the details of the repayment?

 

A4: Creditor Mindao said that Mt.Gox will calculate the proportion of each creditor's claims (only those who choose to receive repayment in "kind" form, because some creditors have chosen to accept legal currency repayment) according to the BTC price at the time of bankruptcy, and then distribute the BTC held to different creditors according to the proportion.

 

Considering that Mt.Gox lost a total of about 650,000 BTC that year, and currently still holds 140,000 BTC, this means that the recovery rate of BTC currency is about 21.5%. In simple terms, if you held 100 BTC in Mt.Gox, you can only get back about 21.5 BTC now. The currency standard has undoubtedly plummeted, but considering the hundreds of times increase in BTC in recent years, the fiat currency standard is a huge profit (equivalent to passive lock-up).

 

Odaily Note: Regarding the specific losses of the Mt.Gox hack, the exchange initially stated that 850,000 BTC were lost (750,000 belonged to customers and 100,000 belonged to the platform), but later Mt.Gox stated that 202,185 bitcoins that were thought to have been stolen were found on the system, so the loss should be 650,000 BTC.

 

Q5: Why must the debt ratio be calculated according to the BTC price of that year?

 

A5：Essentially, it is because of "insolvency". The amount of BTC held by Mt.Gox today cannot cover its currency-based liabilities, and it is impossible to repay in kind 1:1. This determines that Mt.Gox must find a price to calculate the proportion of debts and then allocate current holdings. The specific price depends on the ruling made by the Japanese court when considering the bankruptcy case.

 

Mindao also added that at that time, users in the Mt.Gox exchange held not only BTC, but also fiat assets, so Mt.Gox had to choose a certain currency as the basis for calculation - in fact, Mt.Gox used the yen price as the benchmark.

 

Q6: What was the BTC price at that time? What was the basis?

 

A6:The Tokyo District Court has previously made a liquidation ruling on the Mt.Gox bankruptcy case. According to Japanese bankruptcy laws, the value of Mt.Gox's BTC claims will be calculated based on the price when the company went bankrupt in April 2014 - the value of each BTC claim is fixed at 50058.12 yen (about 314 US dollars at the current exchange rate).

 

However, this price will only be used to calculate the creditor's claim ratio, and does not mean that each BTC held by the creditor can only receive 50058.12 yen. In fact, according to the repayment of the claim ratio, the final amount that the creditor can receive per BTC is much greater than this figure.

 

Mindao added that before Mt.Gox went bankrupt in early 2014, the lowest BTC in Mt.Gox fell to $150, while the market price was about $300 at the time, which means that users who bought BTC at the bottom of the Mt.Gox site that year can get the largest compensation "income".

 

Q7: How do creditors receive repayment?

 

A7: At the beginning of this year, the creditor has registered the payment address, and will receive the payment through Kraken, Bitstamp, Bitgo and other exchanges.

 

Q8: What is the holding address of Mt.Gox? How to detect liquidity?

 

Q8: After the last collection on May 28, the BTC held by Mt.Gox is mainly stored in three addresses, each of which holds 47,230 BTC. The specific address is as follows:

 

1AsHPP7WcGnDLzxW2bUa2FcbJP3eZVEqpx；

 

16eAGJEjqsUqngMfcysQECvp7TMU37P9gX；

 

1HeHLv7ZRFxWUVjuWkWT2D5XFbXXvHoV68；

 

It is recommended to use the Mt.Gox wallet interface provided by Arkham for monitoring.

 

Q9: Who are the groups that received repayments? Has the debt structure changed over the years?

 

A9: There are changes. The Mt.Gox hacking incident has happened for many years, and the related claims have been circulating in the market for a long time. A large number of original creditors have traded their claims to institutions specializing in bankruptcy claims in order to realize them as soon as possible.

 

Galaxy research director Alex predicts that about 20,000 BTC claims have been acquired by the bankruptcy fund, and another 10,000 claims belong to the exchange Bitcoinica BK.

 

Q10: How to evaluate potential selling pressure?

 

A10: It depends on the creditor's expectation of selling after receiving repayment.

 

Mindao predicted that this matter has been ten years after all, and the creditors are also the earliest participants in the currency circle (diamond hands), and many debts have changed hands during the period, so the psychological impact may be greater than the actual impact.

 

Alex gave a similar prediction. Most of the institutions that have actively acquired Mt.Gox over the years are high-net-worth Bitcoin holders, who prefer to accumulate positions at a discount rather than arbitrage through fast transactions.

 

Alex added that considering the poorer liquidity of the BCH market and the creditors' belief in BCH is obviously lower than BTC, BCH is expected to perform relatively poorly after Mt.Gox repayment.

 

Original title