Mt. Gox, the bankrupt cryptocurrency exchange, has once again become one of the most talked-about topics in the cryptocurrency field, ten years after its bankruptcy. At 04:00 on the night between July 4th and 5th, Mt. Gox’s wallet received over $2 billion, signaling the start of the investor compensation plan. However, fear of mass sell-offs has taken over the market, leading to a significant decline in the price of Bitcoin. These $9 billion, which are supposed to be distributed by the failed crypto exchange, are one of the main factors contributing to the current panic. But are these fears justified? And, more importantly, how much compensation will Mt. Gox investors receive?
Should investors fear a market crash?
Investors will have to choose between fiat and crypto payments. 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 payments began in April. Therefore, those who will receive BTC are likely people who will not sell them immediately, as they would have chosen to receive fiat if they wanted to sell.
Furthermore, 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 after 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 will not be a huge selling pressure.
Additionally, the payments will be distributed among different exchanges, further alleviating the negative impact of potential sales.
How much money will Mt. Gox investors receive?
Investors will not make as much profit as everyone thinks. Many people believe that those affected by Mt. Gox will receive huge profits and therefore will sell, causing a market crash. However, when Mt. Gox halted trading in February 2014, the price was $850. According to unofficial information, those who will receive restored BTC tokens will only receive about 15% of their losses, 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 Bitcoin price.
Conclusion
However, this information is not confirmed, and these percentages may be subject to change. Nevertheless, 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) based on current prices.
While some may consider this compensation unfair, considering the current price of the cryptocurrency, the Mt. Gox liquidators have devised the best possible plan that benefits all parties involved. The investors’ money is there, and anyone who has filed a claim for compensation will be reimbursed.
CryptoDnes reached out to the law firm “Mori Hamada & Matsumoto,” which represents some of the Mt. Gox investors, but they declined to comment on the situation due to conflicts of interest.
We also attempted to contact lawyer Nobuaki Kobayashi, who represents the exchange, but at the time of writing this article, he has not commented on the compensation plan.
