Mt. Gox, the Japanese bitcoin exchange that famously collapsed into bankruptcy a decade ago following a significant hack, is now poised to compensate its creditors, who have endured a lengthy wait with promising returns.
During the 2011 hack, approximately 950,000 bitcoins were lost, a substantial portion of which, about 140,000 bitcoins, have been recovered. With today's soaring bitcoin prices, these recovered coins are valued at around $9 billion, set to be returned to their rightful owners.
Among those awaiting compensation is Gregory Greene from Illinois, who filed a class action lawsuit shortly after Mt. Gox's bankruptcy in 2014. At the time, Greene's frozen account contained bitcoin worth $25,000, though he didn't disclose the exact amount of coins.
Back then, bitcoin traded at about $600 per coin; today, it exceeds $60,000. This surge implies that Greene's lost holdings could now be worth roughly $2.5 million, reflecting a staggering 10,000% increase. However, the exact payout details remain undisclosed, with distributions expected to commence in July.
John Glover, Chief Investment Officer of Ledn, a crypto lending firm, anticipates a historic windfall for creditors. "Many will likely cash out, turning their experience of being stuck in Mt. Gox's bankruptcy into their most profitable investment ever," Glover told CNBC.
Originally named after the trading card game "Magic: The Gathering Online Exchange," Mt. Gox was once the largest bitcoin exchange globally, facilitating a substantial portion of global bitcoin transactions in dollars.
Following a series of thefts, Mt. Gox attributed the disappearance of bitcoins to a flaw in bitcoin's system, which purportedly allowed hackers to siphon coins out of user accounts under the guise of incomplete transaction messages.
Recently, the court-appointed trustee overseeing Mt. Gox's bankruptcy announced that payouts to its approximately 20,000 creditors would begin in July, comprising both bitcoin and its early offshoot, bitcoin cash.
According to Alex Thorn from Galaxy Digital, most creditors plan to receive their payments in cryptocurrency rather than fiat currency, opting to hold onto their assets. Thorn noted that many prominent figures in the bitcoin community, such as early investor Roger Ver and Bitcoin Foundation's former director Bruce Fenton, are among the major claimants.
While some creditors intend to hold onto their bitcoin, anticipating future gains, others may choose to liquidate their holdings after a decade-long wait for financial relief.
Tax considerations also play a crucial role, influencing creditors' decisions to accept cryptocurrency disbursements, potentially avoiding immediate capital gains taxes and speculating on future price increases.
As July approaches, analysts speculate on potential market impacts due to potential sell-offs by Mt. Gox creditors, suggesting short-term price pressures followed by a rebound in crypto prices from August onwards.
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