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Cryptocurrency markets are in turmoil as multi-billion dollar Mt. Gox payments begin
According to onchain data, the first payments have begun, although the timing of when the coins will be distributed to investors remains unclear.
Defunct Bitcoin exchange Mt. Gox is causing a stir in the market as businesses and individuals prepare to receive refunds nearly a decade after the platform went bust.
The administration overseeing Mt. Gox’s payment plans will distribute a large sum of its 142,000 Bitcoins and Bitcoin Cash to users who lost funds when the platform was last hacked in July 2014. The current payments are going to creditors who have agreed to forfeit 10% of their share in exchange for an advance payment before the completion of civil litigation procedures, with Coinshares recently estimating 75,000 coins will enter circulation.
News that Mt. Gox paid for 2014-era coins that were lost on its exchange has caused a cryptocurrency crash prices to bleed out.
Bitcoin has lost 20% of its value in the last month, now trading at $55,248. Meanwhile, Ethereal It fell below the $3,000 mark, trading at $2,950 and also losing 20% in the last thirty days.
Coins of the 2014 era
Most analysts agree that the sell-off that hit the market was triggered by Mt. Gox payments and the likelihood of tens of thousands of coins entering the market.
When the platform collapsed in July 2014, the price of Bitcoin was $600, which means that at today’s value, investors are looking at a potential profit of 10,000%.
However, some are happy that the cryptocurrency market will be freed from this looming threat.
“The Mt Gox coin comeback is causing problems today and may lead to short-term weakness for BTC, but in the long run it will be positive: the fear of Mt Gox coins coming to market has been a hindrance for so long that it is just another risk that must be eliminated for the long-term success of BTC,” said Rennick Palley, founding partner of early-stage venture capital firm Stratos.
Eligible companies
Five companies are eligible recipients of the Mt. Gox era coins and are tasked with redistributing payments to people who lost money in the original bankruptcy: Bitstamp, Bitgo, Kraken, Bitbank, and SBI VC Trade.
However, despite a June 24 notice from the trustee in charge of disbursing Mt. Gox funds, which said the funds would begin flowing in early July, the details of which companies will receive the tokens first remain unclear; as does how those companies will in turn distribute the cryptocurrency they receive.
July 4th, PeckShield alerted that an address linked to Mt. Gox had made a massive transfer of 47,000 BTC ($2.7 billion) to a new address, along with 1,544 BTC worth $84 million to the aforementioned Bitbank. A day later, Mt. Gox sent another 1,200 BTC or $64 million to a new address.
While Bitbank has not confirmed the payments, the data from Arkham Intelligence indicates that the company has started moving these funds into its wallets. A wallet associated with the Japanese company shows a large number of Bitcoin transfers over the weekend, ranging from less than 1 BTC to 90 BTC.
While there is concern in the market that beneficiaries of the funds may sell those coins, some analysts say not everyone will sell.
“While a large portion of the redeemed tokens will certainly be sold, I expect savvy whales to keep their skin in the game ahead of the impending bull run,” said Phillip Alexeev, Chief Growth Officer at CrossFi. He told The Defiant that investors have been able to live without those funds for many years and “unless they are absolutely desperate,” can continue to wait for their returns to be maximized.