Bitcoin dropped -8%; here is why
- A few hours ago, Bitcoin dropped -8% in a matter of minutes on news that "wallets belonging to Mt Gox and US government are making transactions."
- We have analyzed the potential market impact back and forth and do not think this would be a big deal, and the market should be well aware of the (eventual distribution) of those Bitcoins.
- Hence our inclination to buy any major dip around those headline tape bombs. At 5:40 am SG/HK (or 5:40 pm NY), we posted an update in our telegram group that "reports of US government seized BTC being moved false." Since then, Bitcoin has been up +3%. The best way to stay ahead of false rumors is to be informed.
- Mt.Gox is to start distributing funds to its creditors on March 10, with September 30 set as the deadline for repayments. $1.7 billion in cash, 141,000 BTC, and another 142,000 BCH will be distributed as part of a civil rehabilitation plan, targeting 10,000 customers globally.
- Mt.Gox was one of the world’s largest cryptocurrency exchanges that operated from 2010 until it declared bankruptcy in 2014 after a series of hacks that was speculated to have been skimming money from the exchange since 2011. At its peak, Mt.Gox accounted for about 70% of the total Bitcoin trading volume.
- The hacks resulted in 850,000 stolen Bitcoin valued at $500 million at the time and worth $17.8 billion today. Only 200,000 BTC has since been recovered.
- Mt.Gox had filed for bankruptcy after the major loss which led to a 7.5 year legal battle before a resolution in the form of a rehabilitation plan was drawn up in 2021.
- Since not all the stolen BTC could be recovered, only a fraction of the original amount held by creditors will be compensated.
- All creditors will receive a base payment with four options to receive the remainder of their deserved funds including 1) early lump-sum repayment (where customers can recover 15-20% of their lost funds), 2) repayment by bank remittance, 3) repayment for a portion of crypto rehabilitation claims in crypto, or 4) repayment through a fund transfer service provider.
- When Mt.Gox disintegrated in February 2014, Bitcoin traded at around $550. With Mt.Gox’s payouts at today’s Bitcoin price level of $22,000, customers who had their funds stolen can reclaim their Bitcoin after 9 years with a 3900% increase in value.
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