A decade after Mt. Gox’s bankruptcy, the cryptocurrency exchange has once again become one of the most discussed topics in the crypto space. At 04:00 on the night between July 4 and 5, Mt. Gox’s wallet transferred over $2 billion, signaling the start of the compensation plan for investors. However, the fear of mass sell-offs took over the market, leading to a significant drop in Bitcoin’s price. The $9 billion to be distributed by the defunct crypto exchange is one of the main factors for the current panic. But are these fears justified? And more importantly, how much will the compensation for Mt. Gox investors be?
Are investors right to fear a market crash?
Investors must choose between fiat and crypto payouts. All cash balances of investors will be paid out at 100%. However, those who wanted to sell may have already done so, as fiat currency payouts began in April. Therefore, those who will receive BTC are people who are unlikely to sell in advance because if they wanted to, they would have chosen to receive fiat.
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In addition, not all payments will be made at once, as there are two types of payments: ELSP (will receive everything now) and FP (will receive a small percentage now, and the rest over several months/years). ELSP payments will also not be distributed all at once; they will likely be made over several months (between July and October). Therefore, even if many people decide to sell, there won’t be a huge pressure to sell.
Also, the payments will be distributed among different exchanges, further mitigating the negative impact of potential sales.
How much money will Mt. Gox investors receive?
Plaintiffs do NOT have as much profit as everyone thinks. Many people believe that those affected by Mt. Gox will receive huge profits and therefore sell and crash the market.
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This is not the case. When Mt. Gox suspended trading in February 2014, the price was $850. According to unofficial information, those who will be reimbursed in BTC tokens will receive only about 15% of the lost amount, which means 1 goxBTC = 0.15 BTC –> 1 BTC = 6.67 goxBTC. Therefore, the effective price at which their assets were locked is ~$8,300.
In other words, the value of the compensation does not change, regardless of the current price of Bitcoin.
Conclusion
However, this information is not confirmed, and these percentages may change. Nonetheless, it is certain that if an investor had 10 BTC at the time of the bankruptcy, they will not receive the equivalent amount (~$553,000) according to current prices.
Although some may consider this compensation unfair, given the current price of the cryptocurrency, Mt. Gox’s liquidators have devised the best possible plan that benefits all parties. The investors’ money is there, and everyone who has filed a claim for compensation will be compensated.
The CryptoDnes team contacted the law firm “Mori Hamada & Matsumoto,” which represents some of the Mt. Gox investors, but they declined to comment on the situation due to a conflict of interest.
We also tried to contact lawyer Nobuaki Kobayashi, who represents the exchange, but he has not commented on the compensation plan at the time of writing this article.
