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Bitcoin Starts to Recover After Mt. Gox Trustee Disbursements Cause Price Crash
The price of bitcoin has seen a slight recovery today, after the cryptocurrency saw one of its biggest recent drops on Friday.
The price movement came after the trustee of the failed bitcoin exchange Mt. Gox began making refunds to the exchange’s creditors. On July 5, the trustee of the Mt. Gox rehabilitation announced which had made refunds in bitcoin and Bitcoin Cash to some customers of the failed exchange as part of a rehabilitation plan. Refunds are only made when certain conditions are met, such as confirmation of registered accounts, an agreement to accept a settlement payment, and other conditions.
The Mt. Gox trustees’ statement did not specify how much would be returned to the exchange’s former customers, but reports suggest the figure was equal to about 15% of the holdings investors had when the exchange closed in 2014.
While numerous bitcoin and cryptocurrency exchanges in general have collapsed over the past decade or so, Mt. Gox is still remembered as the granddaddy of cryptocurrency exchange failures. The exchange officially collapsed in February 2014 and at the time it was claimed that the exchange had been hacked and the bitcoins had been stolen.
As the story of the Mt. Gox collapse unfolded throughout 2014 and 2015, it was later found that the supposedly “hacked” bitcoins had begun disappearing from the exchange as early as late 2011, and that, by 2013, most of the bitcoins held by Mt. Gox had disappeared.
Underscoring how questionable this all was at the time, and noting that Mt. Gox was, at the time, the largest bitcoin exchange in the world, some of the bitcoin stolen from Mt. Gox were later resold to the exchange.
Mark Karpeles (pictured), CEO of Mt. Gox, was arrested in 2015 by Japanese authorities. He was charged with embezzlement and manipulating the exchange’s computer system to inflate its balance.
Some of the bitcoins that Karpeles allegedly stole were allegedly used to finance prostitutes. As reported in 2015, Karpeles spent an “unspecified amount on prostitutes” involving “several women he met at venues offering sexual services.”
After initially denying the allegations, Karpeles later confessed to Japanese police who created fake bitcoins. He was formally charged with embezzlement in September 2015, but the case was largely dropped except for a minor record-keeping charge, in 2019.
Fast forward to 2024: Mt. Gox trustees are only now distributing what they managed to salvage from the exchange.
The main driver of bitcoin’s price decline since Friday has been the amount of bitcoin that has hit exchanges since the Mt. Gox disbursement. The trustee released 142,000 bitcoins, along with 143,000 in Bitcoin Cash and 69 billion Japanese yen ($432 million). In simpler terms, a large amount of bitcoin that had been sitting idle for a decade has started to enter the market.
The only good news in this sordid tale is that while Mt. Gox investors may only recover 15% of their previous bitcoin holdings, the value of those holdings is much higher in 2024 than it was in 2014. A single bitcoin in February 2014, just before the Mt. Gox collapse, was worth about $600. That same single bitcoin is worth about $56,000 today.
Image: ANN News
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