Mt. Gox creditors close to receiving repayments

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Mt. Gox creditors could begin receiving payments before the end of the year as the deadline for selecting a payment method passes.

The rehabilitation trustee for the defunct exchange Nobuaki Kobayashi gave notice of the deadline expiration on April 7, noting that creditors will be unable to change their selections in the future. Any further changes to their preferences will have to be carried out with the express approval of Kobayashi as the ecosystem braces itself for the first tranche of payments.

Creditors have the option to receive payment in Japanese yen, BTC, and BCH based on their preferences. Mt. Gox disclosed that it would distribute JPY69 billion (US$523 million), 143,000 BCH, and 142,000 BTC amounting to over $3 billion.

Based on the settlement arrangement, creditors will receive payment in yen for the first 200,000 worth of debt, and in the event that they opt for a mix of digital assets and cash, payment will be made in the ratio of 71% and 29%, respectively. According to the notice, all payments, including base and early lump sum repayments, are expected to be made before the expiration of the October 31, 2023, deadline.

“Please also note that, in consideration of various circumstances, the above deadline might be extended with the permission of the Tokyo District Court, or a different deadline might be set for some of the repayments with the permission of the Tokyo District Court,” read the notice.

The original deadline for the selections was pegged for January but was extended by two months after a large number of creditors failed to submit their choices. In October 2022, after a series of back and forth in court, a rehabilitation proposal was approved by aggrieved investors that promised to return up to 90% of lost assets.

At the height of its popularity, Mt. Gox served as the largest BTC exchange in the world before suffering a damning “security breach” that led to the loss of 850,000 BTC. The exchange filed for bankruptcy in 2014, and its then CEO Mark Karpeles was arrested a year later and spent a year in prison on suspicion of data manipulation and embezzlement. In 2019, a Tokyo court found him guilty of the data charge but he was acquitted on the charges of embezzlement and aggravated breach of trust.

The settlement could affect BTC price

Since the announcement of the rehabilitation proposal, pundits have argued that the move could have an adverse effect on BTC’s price. The bulk of their argument hinges on the probability of creditors selling all of their assets, a move that could trigger a wave of bearish sentiments in the market.

Conversely, since a bulk of Mt. Gox creditors are early BTC enthusiasts, there is a strong possibility that they may opt to “hodl” their assets which could stoke the flames for a small rally. Since the payouts have been scheduled to be made in trickles, the chances of mass dumping of holdings are slim as market analysts remain certain that the return of Mt. Gox assets will influence prices.

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