Pressure mounts on Bitcoin due to failed Mt. Gox reimbursements, reports CNBC

The bankrupt platform is expected to start distributing assets stolen from clients in a 2014 hack, according to a report

The price of Bitcoin could be affected by the upcoming repayments to thousands of victims in the 2014 heist on the now defunct Mt. Gox virtual currency exchange, experts cited by CNBC believe.

Bitcoin, the world’s largest cryptocurrency, tumbled below $60,000 last week, marking its second-worst weekly decline of the year.

On Monday, the bankrupt Mt. Gox exchange, which is based in Tokyo, announced that it will start distributing the stolen assets in the first week of July. It is expected to return more than 140,000 Bitcoin worth almost $9 billion.

According to the court-appointed trustee overseeing the exchange’s bankruptcy proceedings, disbursements to the firm’s roughly 20,000 creditors will be in a mix of bitcoin and bitcoin cash.

Trustees put together a repayment plan and received a deadline of October 2024 from a Tokyo court last year.

Once the world’s top crypto exchange, handling over 70% of all Bitcoin transactions in its early years, Mt. Gox shut down and went bankrupt in February 2014 after suffering the biggest cryptocurrency heist on record. Hundreds of thousands of bitcoins were stolen from the exchange, which blamed hackers who took advantage of a software security flaw.

Analysts expect the upcoming Mt. Gox repayments to add selling pressure to Bitcoin markets as early investors will receive the assets at a much higher price than when they bought in, which will make some inclined to take profit on some of their holdings.

“Many will clearly cash out and enjoy the fact that having their assets stuck in the Mt. Gox bankruptcy was the best investment they ever made,” John Glover, chief investment officer of crypto lending firm Ledn, said. “Some will clearly choose to take the money and run,” he said.

However, some experts believe that there is enough market liquidity to cushion the blow of any possible mass selling. The losses are likely to be contained and short-lived, analysts told the outlet.

“I think that sell-off concerns relating to Mt. Gox will likely be short term,” Lennix Lai, the chief commercial officer of crypto exchange OKX, told CNBC, noting that “many of Mt. Gox’s early users as well as creditors are long-term Bitcoin enthusiasts who are less likely to sell all of their Bitcoin immediately.” 

Bitcoin enjoyed a major rally earlier this year, climbing over $70,000 after the US Securities and Exchange Commission’s approval of the first spot Bitcoin ETF. The latest Bitcoin halving – a mechanism to limit supply that takes place every four years – in April has also propelled the cryptocurrency’s price.

On Tuesday, Bitcoin was trading down almost 2% at $61,849 per token.