Bitcoin Repayments From Mt. Gox Begin, Will It Affect Price?
The Mt. Scholarship Rehabilitation Administrator. Gox bankrupt in 2014, Nobuaki Kobayashi published a new letter today regarding refunds of recovered Bitcoin. In it, Kobayashi informs that the deadline for creditors to submit their discharge information passed yesterday, April 6, 2023.
After several years of delays, this opens the window for Bitcoin refunds, which must be made by October 31, 2023. The letter also states that the rehabilitation administrator is currently making the necessary preparations for the refunds.
This includes, among other things, Kobayashi reaching out to banks, money transfer providers, and cryptocurrency exchanges and custodians to clarify refund arrangements:
[…] which include confirming the selection and registration made by rehabilitation lenders, as well as engaging in discussions and information sharing with banks, money transfer providers and cryptocurrency exchanges or custodians involved in the repayment.
In view of this, the administrator also states that “it is expected that it will take some time before the refund is initiated”.
Core repayment, interim repayment and early lump sum repayment are currently scheduled for October 21, 2023, although the exact timing of repayment to individual redevelopment lenders has yet to be determined. Furthermore, Kobayashi notes that the repayment term can be extended with the approval of the Tokyo District Court, if necessary.
Notably, Luxembourg-based cryptocurrency exchange Bitstamp is one of four cryptocurrency exchanges selected by curator Mt. Gox to help with refunds. Bitstamp repeatedly published guidance in recent weeks about what creditors must do to make their claims.
How will this affect the price of Bitcoin?
As per the rehabilitation plan, victims of the Mt. Gox will be refunded a total of 141,686 Bitcoin (BTC), about 143,000 Bitcoin Cash (BCH) and 69 billion yen. However, the amount of refunds is still unclear. Lenders were able to choose whether to receive their claim in cryptocurrencies or fiat by the deadline.
In addition, the first 200,000 yen (about $1,520) of each creditor’s claim will be paid in yen, according to a moderator on the bankruptcy subreddit Mt. Gox. If credit is higher, lenders can choose between crypto and cash, receiving 71% back in crypto and 29% in cash after the first payment.
Therefore, it is difficult to predict the actual amount of Bitcoin that could really put selling pressure on the market. Notably, it should also be noted that the admin is not dumping all Bitcoin into the market at once, but rather spreading it out over the period to the end of October.
The two biggest lenders, Bitcoinica (a New Zealand-based cryptocurrency exchange) and Mt. Gox Investment Funds opted to have their bankruptcy funds paid out in Bitcoin. Estimates suggest they make up 20% of all claims.
However, according to a Bloomberg report, Mt. Gox Investment Fund has already stated that it will hold its BTC and not sell it. Additionally, a drop in the price of Bitcoin due to Mt. Gox looks pretty unlikely at the moment as the market is able to digest low volumes despite historically low liquidity.
At press time, BTC price was trading at $27,921.
Featured image from Chainalysis Blog, chart from TradingView.com