- November 17, 2021
- Posted by: admin
- Category: BitCoin, Blockchain, Cryptocurrency, Investments
The trustee of defunct Bitcoin exchange Mt. Gox announced that creditors have agreed to a $9 billion redistribution package.
This would see around 141,000 Bitcoin returned to investors who lost out following the infamous hack in February 2014. While this is welcome news to victims, it still represents a fraction of what was taken.
Nonetheless, the return of some Bitcoin would bring a degree of closure to the long-running saga. On top of which, considering $BTC was priced at around $550 at the time of the hack, as a collective, victims would be up in dollar terms.
At the same time, some observers have expressed concern over what a supply spike might do to the price of Bitcoin.
Mt. Gox was once the biggest Bitcoin exchange
The Mt. Gox hack sent shockwaves around the crypto community in 2014, after 740,000 Bitcoin was stolen from investors and around 100,000 from Mt. Gox itself. Such was the gravity of the situation; some had likened it to the collapse of Bear Stearns during the 2008 financial crisis.
It highlighted the risks involved with dealing in cryptocurrency, more so when improper protocols were the norm at the time.
Critics latched onto the incident, saying crypto doesn’t offer the same protections as with banks. For example, the Federal Deposit Insurance Corporation in the U.S covers up to $100,000 held in a bank account, or Financial Services Compensation Scheme in the U.K, which covers up to £85,000.
As the most prominent Bitcoin exchange at the time, many assumed the hack spelled the end for Bitcoin. Subsequent investigations uncovered company mismanagement, insolvency before the hack, poor segregation of duties, and outdated software controls.
How might the market react?
The redistribution proposal states victims can make their claims from October 20. But, there has been no confirmation on when payouts would be made.
“Creditors can elect to receive about 90% of the assets owed to them under the proposal that was ratified by a majority, according to the English language version of the announcement dated Oct. 20.”
Even so, Avi Felman, a portfolio manager at BlockTower Capital, said the payout date could trigger volatile market conditions as victims take profits.
“It’s a date every market participant needs to keep their eye on.
[There] will likely be significant volatility around the event, and if Bitcoin is overheated, it could mark a local top as holders finally are able to take profits on their positions.”
Similarly, Lark Davies tweeted that the return of over 140,000 Bitcoin would add “A LOT of sell pressure” to the market.
The post Mt. Gox Bitcoin redistribution plan approved, how might the market react? appeared first on CryptoSlate.
