This Halloween Marks the End of Mt. Gox's Bitcoin Legacy
The long-standing saga of the Mt. Gox cryptocurrency exchange approaches its conclusion as the repayment deadline looms.
The saga of Mt. Gox, a once-prominent Tokyo cryptocurrency exchange, is nearing its closure as the deadline for repayments fast approaches this Halloween.
Mt. Gox, which once held approximately 34,689 Bitcoin (BTC), is preparing for its repayment process ahead of the October 31 deadline. The exchange faced significant losses, around 650,000 BTC, due to various thefts that occurred unnoticed from 2011 until its downfall in 2014, with about 200,000 BTC later recovered from an outdated wallet. These recovered coins will form the basis for repayments managed by court-appointed trustee Nobuaki Kobayashi.
Notably, Kobayashi, dubbed the “Tokyo Whale”, made headlines in 2017 and 2018 as he sold off Mt. Gox’s Bitcoin to facilitate fiat repayments. Recently, in mid-2024, there was a resurgence of activity in the wallets, with roughly 100,000 BTC moved between Mt. Gox addresses for distribution, though not all transactions equated to actual sales.
The repayment deadline was previously pushed back by a year to afford creditors additional time to complete their claims. With an estimated $3.9 billion still residing in Mt. Gox-associated wallets, the upcoming Halloween could raise worries regarding potential sell-off pressures.
Events Surrounding the Tokyo Whale’s Bitcoin Sales
Kobayashi’s initial significant Bitcoin sales happened between September 2017 and March 2018, with evidence from blockchain data revealing this was particularly evident on February 6, when approximately 35,841 BTC were sold for 38 billion Japanese Yen. This was at a time when Bitcoin was also experiencing a downward trend, following a peak of nearly $20,000 at the end of 2017.
This sale didn’t lead to a major supply shock at the time, as Bitcoin’s overall market cap was around $140 billion. The subsequent drop in its value during that period was seen by some as coinciding with Kobayashi’s substantial liquidation of assets, despite his assertions that the sales did not worsen Bitcoin’s decline.
The Halt of Kobayashi’s Sales
After an initial wave of sales, Kobayashi ceased selling the exchange’s Bitcoin when the Tokyo District Court shifted focus from bankruptcy procedures to civil rehabilitation, appointing him as the trustee for this phase. In this new context, claims for Bitcoin do not convert to cash but instead honor obligations through a court-approved repayment plan, allowing distributions in BTC or Bitcoin Cash (BCH).
While Bitcoin managed to hold steady above $6,000 most of the year, it faced volatility during the November 2018 Bitcoin Cash hard fork.
Repayment Movements and Market Responses
By mid-2024, the market position of Bitcoin had improved significantly from the earlier years, with a notable bull rally lifting its value past $100,000 in December 2024. Mt. Gox began moving Bitcoin in early July 2024 to set the stage for creditor repayments as part of the civil rehabilitation initiative. Initially, fears rose that creditors would hastily sell their received Bitcoin, potentially impacting the market.
Contrary to expectations, there was “no significant spike” in trading volume post repayments, challenging prevalent analyst speculation that a majority of creditors might sell upon receipt of their funds. As of August 1, available data pointed to a decrease in Mt. Gox’s holdings by nearly 100,000 BTC, with approximately 46,000 BTC remaining under Kobayashi’s stewardship.
Extension of the Repayment Deadline
On October 10, 2024, Kobayashi informed that the majority of repayments to verified creditors had transpired, albeit with some pending due to various procedural issues. With judicial endorsement, the repayment timeline was pushed back to October 31, 2025, with an appeal for all remaining creditors to conclude their submissions via the Mt. Gox claims portal.
Currently, Mt. Gox’s wallets still contain around 34,689 BTC, valued at an approximate $3.9 billion, awaiting distribution ahead of preparations for further repayments. As Halloween approaches, market observers remain watchful for any implications of Mt. Gox’s impending repayments.
