The cryptocurrency community has been silent for a long time since the Bitcoin ETF was listed at the beginning of the year. In recent days, an interesting thing has happened: MtGox, a Bitcoin exchange that went bankrupt ten years ago, has begun to repay users. Due to the sharp rise in the price of Bitcoin in the past decade, many users have made a "passive investment" with huge returns in disguise.
A "forced" long-term, high-risk investment MtGox Exchange was first established in 2010. At first, it was just an online trading platform for card game enthusiasts. Later, it transformed into a Bitcoin trading platform and once became the world's largest Bitcoin exchange, accounting for nearly 70% of Bitcoin trading volume. Due to the homophony, Chinese netizens also called it "Mentougou Exchange". However, in just a few days at the end of February 2014, the exchange was investigated by the US federal law enforcement agencies, and hackers stole 850,000 Bitcoins from the exchange (accounting for 7% of the global Bitcoin issuance at the time), of which the number of Bitcoins of platform users reached 750,000. MtGox Exchange immediately filed for bankruptcy protection with the Tokyo District Court. Later, the exchange announced the recovery of 200,000 Bitcoins. A few years later, the Tokyo District Court ruled that 140,000 of them should be transferred to a trust fund to compensate users who suffered losses. When MtGox Exchange declared bankruptcy that year, the company revealed that it owed more than 20,000 creditors nearly 45 billion yen (about 440 million US dollars at the exchange rate at the time). The turning point of the whole thing is that when the exchange went bankrupt, the price of Bitcoin was around US$600, and after years of twists and turns, this alternative asset has now risen to above US$60,000.
Unlike the previously reported FTX exchange liquidation case, MtGox investors can choose to get back their deposits in bitcoin at a certain ratio. So they are equivalent to making a high-risk investment for 10 years. Based on the bitcoin price at press time, the total value of bitcoins to be sent by MtGox is close to $9 billion, equivalent to 20 times the total value of customer assets at the time of the 2014 crash. Limited long-term impact on market pricing According to multiple announcements from MtGox, the return of bitcoins (and bitcoin cash) will begin in July. The return of 140,000 bitcoins that have been "locked for ten years" to circulation has also caused market concerns. After the relevant news surfaced last week, the recent continuous decline in bitcoin once fell below the $60,000 mark. John Glover, chief investment officer of crypto lending company Ledn, said that many people will obviously enjoy the fact that "the investment trapped in the MtGox bankruptcy case is the best deal they have ever made in their lives" and then cash out quickly. Although most analysts agree that bitcoin prices will be under pressure in the short term, more people are also emphasizing that this is only a temporary shock. On the one hand, many users of the MtGox exchange are long-term Bitcoin enthusiasts, and today they no longer need the profits to improve their lives (and they will have to pay capital gains tax if they sell them). On the other hand, the market has encountered many similar events in recent years, and they have not caused a sustained catastrophic drop in the price of the currency. Last month, the cryptocurrency exchange Gemini returned $2 billion worth of Bitcoin to users whose funds were trapped in its lending program. The trading program suspended withdrawals in mid-November last year, and the price of Bitcoin has doubled or tripled since then. So JPMorgan Chase also linked the decline in Bitcoin prices to the profit-taking of Gemini creditors in its research report last week. Also last month, the German government sold 5,000 Bitcoins worth $300 million. Previously, the country's police found 50,000 Bitcoins in an operation to crack down on the pirated movie website Movi2k.
