Mt. Gox creditors choose Bitcoin over legal currency to collect claims: impact on Bitcoin market

02/17/2023 19:59 • AI & Tech Insights • 124 views

According to reports, according to people familiar with the matter, the two largest creditors of Mt. Gox, a crypto exchange that collapsed nine years ago due to hacker attacks, have chosen to collect their claims mainly in Bitcoin (BTC). Bitcoinica and MtGox Investment Funds (MGIF), the cryptocurrency exchange headquartered in New Zealand, together account for about one fifth of the total claims of Mt. Gox, and will receive 90% of the recoverable funds. This decision may alleviate the long-term concern of Bitcoin holders that the liquidation related to the bankruptcy claim of Mt. Gox may put pressure on the price of Bitcoin, because if these two creditors choose to pay in legal currency, the trustee supervising the bankruptcy property may be forced to sell most of Bitcoin recovered by Mt. Gox to meet the payment requirements in legal currency.

Sources: The two largest creditors of Mt.Gox choose to collect their claims mainly in Bitcoin

Interpretation of the news:

Mt. Gox, a now-defunct cryptocurrency exchange, made headlines in 2014 when it collapsed following multiple hacker attacks. The incident resulted in the loss of over 850,000 BTC, causing significant financial and reputational damage to the Bitcoin market as a whole. Since then, the trustee supervising the bankruptcy property has been working to recover and distribute the remaining assets to creditors.

Recently, two of Mt. Gox’s largest creditors, namely Bitcoinica and MtGox Investment Funds, have decided to collect their claims mostly in Bitcoin instead of legal currency. Combined, these creditors make up about 20% of the total claims. They will receive 90% of the recoverable funds, which would translate to a significant amount of Bitcoin. This decision is seen as a positive development for Bitcoin holders who have been concerned about the long-term effects of the bankruptcy claim on the price of Bitcoin.

If these two creditors had chosen to pay in legal currency, the trustee would have been forced to sell most of the Bitcoin recovered by Mt. Gox to meet the payment requirements. This could have led to a large sell-off and a decline in the price of Bitcoin. However, by choosing Bitcoin, the creditors have signaled their confidence in the cryptocurrency and its potential for growth. This decision also avoids the danger of a sudden influx of Bitcoin onto the market, which would have disrupted the current supply and demand dynamics.

Overall, this development is good news for the Bitcoin market as it reduces the risk of a potential sell-off, and restores faith in the cryptocurrency as a viable investment option. It also highlights the resilience of Bitcoin despite the volatility and risks associated with the market. The decision of these creditors to collect their claims mainly in Bitcoin suggests that they believe in the long-term potential of the cryptocurrency and are willing to take a risk on its growth.

In conclusion, the decision by Mt. Gox creditors to collect their claims mainly in Bitcoin is a positive development for the cryptocurrency market. It strengthens the position of Bitcoin as a legitimate investment option and reduces the likelihood of a sell-off due to the bankruptcy claim. This decision also demonstrates the trust of the creditors in the potential of the cryptocurrency to grow and recover.

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