MtGox Set to Compensate BTC Holders

Mt.Gox to Compensate BTC
Updated · 11:43:28 Author: Block Explorer 2023
Coin World News: Creditors of the Mt.Gox bankruptcy case have been waiting for over 10 years and have finally seen the light of compensation. According to the latest news, the physical distribution of Bitcoin (BTC) and Bitcoin Cash (BCH) will begin in July this year. This article will analyze in detail the specific details of this compensation, market expectations, and the potential impact on the cryptocurrency market.
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Mt.Gox Compensation BTC Distribution Details


1. History of Mt.Gox
Mt.Gox was once the world’s largest Bitcoin exchange, but declared bankruptcy in 2014 due to a hacker attack, with about 940,000 Bitcoins (valued at $424 million at the time) stolen. After years of legal proceedings and asset recovery, Mt.Gox only recovered 15% of the Bitcoins, about 141,868, which are now worth about $9 billion in the market.
2. Early Compensation Plan
In order to receive compensation as soon as possible, many creditors chose the early compensation plan and accepted about a 10% reduction. We estimate that about 75% of Bitcoin creditors chose this option, totaling about 95,000 Bitcoins for early compensation.
3. Compensation Distribution
Of the 95,000 Bitcoins for early compensation:
20,000 will go to the rehabilitation fund
10,000 will go to Bitcoinica BK
65,000 will go to individual creditors
This is far lower than the reported 141,868 Bitcoins.


Analysis of Bitcoin Selling Pressure
1. Creditors’ tendency to hold
Although the market is generally concerned about large-scale Bitcoin selling pressure, we believe that this pressure may be lower than expected for the following reasons:
Long-term holders: Creditors are mostly early Bitcoin adopters who are technically savvy and tend to hold for the long term.
Resistance to the fund’s offer: Creditors have resisted the aggressive offers made by the rehabilitation fund over the years, indicating a preference to hold Bitcoin rather than receive cash compensation.
Capital gains impact: Since the bankruptcy, Bitcoin prices have risen 140 times. Even with only 15% of physical recovery, creditors have gained significant dollar-denominated returns, reducing the incentive to sell.
Even if only 10% of the 65,000 Bitcoins are sold, this means that 6,500 Bitcoins may enter the market. These Bitcoins will be allocated to creditors’ accounts at Kraken, Bitstamp, or Bitgo, and most individuals will directly deposit them into their trading accounts.
2. Fund’s holding intention
Through communication with some of the rehabilitation funds, we understand that the investors in these funds are mostly high-net-worth Bitcoin holders, rather than credit funds engaged in arbitrage trading. Although some limited partners may choose to sell, we believe that the overall selling pressure will not be significant.


Bitcoin Cash (BCH) Selling Pressure
1. Creditors’ interest in BCH
Compared to Bitcoin, the selling pressure on BCH may be greater. The main reasons are:
No initial purchase: Creditors did not actively purchase BCH, but received the forked coins from Bitcoin held by Mt.Gox.
Low liquidity: The market liquidity of BCH is much lower than that of Bitcoin, especially on Kraken and Bitstamp, where the liquidity is only 1/60 of Bitcoin’s.
2. Market impact
Due to the low liquidity and lower market demand for BCH compared to Bitcoin, a large amount of BCH is expected to be sold quickly after distribution, further reducing its market price.


Conclusion
Although the upcoming compensation plan for Mt.Gox has raised concerns about selling pressure on Bitcoin and BCH, the actual situation may not be so severe. Based on our analysis:
Bitcoin: Due to the long-term holding tendency of creditors, combined with the significant impact of capital gains, the selling pressure on Bitcoin may be lower than market expectations.
BCH: Due to the lack of initial purchase motivation and lower liquidity, the selling pressure on BCH will be greater than Bitcoin, and its market performance may be more affected.
Investors need to remain vigilant and closely monitor market dynamics and compensation progress. At the same time, obtaining the latest data and analysis through the Coin World APP will help make wiser investment decisions during this market volatility.
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