Mt. Gox to repay investors in Bitcoin
Mt. Gox, once the world’s leading Bitcoin (BTC) exchange, is set to begin repaying investors using Bitcoin and Bitcoin Cash (BCH).
The repayment was announced on July 5 over a decade after Mt. Gox’s catastrophic collapse. The announcement reads:
On July 5,2024, the Rehabilitation Trustee made repayments in Bitcoin and Bitcoin
Cash to some of the rehabilitation creditors through a part of the Designated
Cryptocurrency Exchanges etc. in accordance with the Rehabilitation Plan.
What was Mt. Gox?
Mt. Gox, short for “Magic: The Gathering Online eXchange,” was founded in 2010 by Jed McCaleb and later sold to Mark Karpelès. Originally created to facilitate trading cards for the game Magic: The Gathering, it pivoted to become a Bitcoin exchange in 2010. At its peak in 2013, Mt. Gox handled over 70% of all Bitcoin transactions worldwide, making it the largest cryptocurrency exchange of its time.
In February 2014, Mt. Gox abruptly ceased operations and filed for bankruptcy. The exchange announced it had lost approximately 850,000 BTC, valued at about $450 million at the time. This loss, attributed to a combination of hacking and poor security practices, sent shockwaves through the nascent cryptocurrency community.
Mt. Gox’s collapse was a watershed moment for Bitcoin and the broader cryptocurrency ecosystem. It highlighted the risks associated with centralized exchanges and the importance of robust security measures in handling digital assets. The incident led to increased scrutiny of cryptocurrency exchanges and calls for better regulation in the industry.
Now, nearly a decade later, Mt. Gox is preparing to repay some of its creditors. The exchange recently issued a notice outlining plans to compensate investors using Bitcoin and Bitcoin Cash. Remarkably, the value of the lost Bitcoin has appreciated significantly since 2014, now worth over $50 billion. This means some creditors might receive more in value than their initial investments, despite the exchange’s inability to recover all lost assets.
The repayment process introduces an intriguing dynamic to the cryptocurrency market. As Mt. Gox releases Bitcoin to creditors, it will increase the circulating supply of the cryptocurrency. Basic economic principles suggest this could potentially exert downward pressure on Bitcoin’s price.
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