Eight years ago, in 2014, the cryptocurrency world was rocked by the hack of Mt. Gox, a popular Bitcoin (BTC) exchange, which was forced to shut down after miscreants managed to dump nearly 850,000 BTC, which is worth over $16 billion at today’s exchange rates.

At the time of the accident, the Tokyo-based exchange was the largest cryptocurrency trading ecosystem in the world, handling more than 70% of the daily bitcoin trading volume in the cryptocurrency market. However, due to its lack of high-quality security protocols, hackers were able to make their way using the crypto assets of more than 24,000 customers, which remains one of the biggest incidents in the history of the digital asset industry.

Now nearly a decade later, a notice has been issued to Mt. Gox said that they have until September 15th to file or transfer a claim. However, the payments have been mired in a protracted legal battle, with the rehabilitation plan delayed many times. Recently, there have been rumors that payments may happen soon, possibly in a large Bitcoin dump.

The rumors have gained so much traction that Mt.Gox creditors recently had to take to social media to say they were completely wrong, with one highlighting that the stock exchange’s defunct payment system is still far from operational.

Creditors put things right
As part of a recent thread on Twitter, Eric Wall, a creditor to Mt. Gox, notes that, contrary to the news circulating on the internet that 137,000 BTC will be dumped into the market soon, the exchange has yet to create the infrastructure needed to facilitate. Such a move, therefore, will not be repayment anytime soon.

Further, as it stands, Wall explained that customers affected by the Mt.Gox hack were not even able to register the address where the outstanding Bitcoin and Bitcoin Cash (BCH) payments should be transferred, suggesting that there is no direct reason to worry about an imminent collapse in market.

The creditor also believes that the payments will likely be made in several installments, thus allaying fears of selling thousands of BTC at once and thus eliminating the price of the main cryptocurrency. Finally, Wall noted that the cryptocurrency exchange has yet to release an exact timetable regarding the repayment process, arguing that even if BTC is issued, it would make sense to “buy rather than sell” the asset due to the prevailing market conditions. At press time, BTC is trading at $18893.

Similarly, Marshall Hainer, another Mount Gox creditor, took to Twitter to confirm that Mt.Gox was nowhere near making its payments owed. He assured market participants that the vast majority of individuals who would receive bitcoin had “pledged” not to sell their holdings in the near term.

The proposed redistribution plan and its possible implications
Earlier this year, in July, Nobuaki Kobayashi, the designated rehabilitation trustee of the Mount Gox Rehabilitation Scheme, announced to the public that the exchange was preparing a payment plan. In an official document, he and his team indicated that eligible individuals have the option to receive their payments in the form of BTC or BCH.

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The rehabilitation plan first came out two years ago and was approved last year. However, out of the 850,000 BTC outstanding, the exchange only has approximately 150,000 BTC to pay its creditors. Speaking to Cointelegraph, Konstantin Shirokov, representative of the decentralized money market Fringe Finance, said:

“Distribution of said coins is only a matter of time, and that explains what has fueled the rumors about the exchange’s eventual plans to release these funds. The excitement of potential beneficiaries is very valid, as are the concerns of investors in the broader digital currency ecosystem about what the issuance and sale of this amount could do. The massive amount of coins on the bitcoin price.”
He added that while the proposed coins are only worth about $2.9 billion at today’s prices, which should not weigh the market too much, overall market sentiment is rather negative. “As such, the issuance of coins and the potential dump could drive the price of bitcoin down in the days following the issuance,” Shirokov stated.

Finally, creditors are due to receive an initial principal payment, after which they can choose the remainder of their money by paying a lump sum or making smaller payments at a later stage. Repayments are made through cash reserves earned through liquidation of Mt. Gox’s BTC.

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Source: CoinTelegraph