The bankruptcy of Mt. Gox in 2014, caused by a hack that resulted in the loss of 850,000 Bitcoins, remains a landmark event in the history of cryptocurrencies. Since then, investors have been waiting for their funds to be returned. However, its major creditors, including Mt.Gox Investment Fund and Bitcoincial recently opted for an early payment in Bitcoin to avoid uncertain legal proceedings that could last several years. Although this involves a financial loss, these creditors will be able to collect about 90% of the actual amount by the end of September 2023.
Major Mt. Gox creditors opt for Bitcoin prepayment option
The announcement of the repayment of Mt. Gox‘s creditors has always caused concern among cryptocurrency investors. Indeed, the massive sale of coins after the repayment could cause prices to fall.
According to Bloomberg, two major creditors of the defunct Japanese exchange decided to receive an early payment in Bitcoin (BTC), which created some relief in the crypto market. They did not want to wait for the end of the legal proceedings to recover their full funds, which could take several years.
This decision will have significant financial consequences for the two giants, which account for a fifth of Mt. Gox’s total debt to its customers. Indeed, they will only be able to recover about 90% of their recoverable funds, or only 21% of what they had at the time of the hack in 2014. However, for many investors, the choice of MGIF and Bitcoinica, a defunct New Zealand-based exchange, is reassuring. This decision means that there will be no need to exchange cryptocurrencies for traditional currencies, which would have had a negative impact on the market.
It is worth remembering that at one time, Mt. Gox was once the largest cryptocurrency exchange in the world. Following the hack in February 2014, the exchange lost 850,000 bitcoins, the equivalent of $450 million at the time. At the current market price of Bitcoin, this amount represents about $20 billion. Mt. Gox had 142,000 BTC, 143,000 Bitcoin Cash (BCH) and 69 billion Japanese yen at the time.
MGIF is not the only Mt. Gox creditor to opt for Bitcoin prepayment
After 85,000 Bitcoins were stolen nine years ago, Mt. Gox creditors engaged in a lengthy legal battle to recover their lost assets. On July 7 last year, the exchange sent an email to some of its customers outlining the terms of repayment for their funds. The exchange offered the creditors payment methods, including a combination of Bitcoin (BTC), Bitcoin Cash (BCH) and fiat or a bank transfer.
MGIF and Bitcoinica creditors are not the only ones who decided to receive their share rather than expected. Since January 6, 2023, Mt. Gox administrator, Nobuaki Kobayashi has called on ex-users, after registering for the refund process, to choose between: taking the anticipated lump sum or continuing to wait for a potentially larger payment at an unknown date.
Creditors have until March 10, 2023 to make a decision, with two options available:
- Receive an early payment that covers much of the lost funds directly.
- Wait for all legal proceedings to be achieved in the hope of recovering all of their funds.
Mt. Gox’s creditors can finally see the end of their ordeal. We hope that they will make the right decision and avoid having to wait indefinitely to get their money back. While early payment in Bitcoin may seem attractive, keep in mind that the September 30 date could be pushed back again, as has happened several times before. Coinpri will continue to monitor this situation and keep you informed of any developments.
Coming from a journalism university background, I came across Bitcoin and cryptocurrencies not long ago.
The potential of the Blockchain seduced me and I made it my research topic.