1. The rise and fall of Mt. Gox
1.1 Background of establishment
Mt.Gox was founded in 2010 as a website for exchanging World of Warcraft game cards. With the rise of Bitcoin, founder Jed McCaleb transformed it into a Bitcoin trading platform. At that time, the Bitcoin market was still in its infancy and lacked mature trading mechanisms and regulatory measures. Mt.Gox quickly attracted a large number of users with its early market layout and developed into the world's largest Bitcoin trading platform.
1.2 Dark Ages
However, the good times did not last long. In February 2014, Mt.Gox announced that 850,000 bitcoins worth about $480 million were stolen due to a hacker attack. This incident shocked the world and put Mt.Gox into bankruptcy. The hacker attack caused huge losses to Mt.Gox users and plunged the entire Bitcoin market into a months-long downturn.
1.3 Bankruptcy and Liquidation
After the hacker attack, Mt.Gox immediately filed for bankruptcy protection and began the bankruptcy liquidation process. The bankruptcy liquidator will be responsible for handling Mt.Gox's debt problems, including compensation for victims. However, due to the huge amount of money involved, the compensation process has not made any substantial progress until recently.
II. Repayment Plan
After many negotiations and preparations, they finally announced a specific repayment plan this year, which aims to provide compensation to affected creditors to make up for their losses caused by the bankruptcy of the platform. According to the official website documents disclosed earlier, the Mt.Gox trustee stated that it will start the BTC and BCH repayment work from early July. At present, these preparations have been prepared, and the exchange and confirmation of the information required for repayment have been completed with the relevant exchanges.
Specifically, Mt.Gox will repay a total of 142,000 BTC (about $8.72 billion) and 143,000 BCH (50.765 million USD) to creditors, with a total selling pressure of about $8.77 billion. Soon after the announcement of this news, the market started to fall. In fact, as early as the early morning of May 28, the Mt.Gox wallet, which had been in cold wallet for 5 years, had an abnormal movement, and 10 transactions were made to an unknown address, transferring 141,685 bitcoins.
Mt.Gox seems to have long been aware of the market risks that may be caused by huge selling pressure. In its official website announcement, the repayment plan for creditors is divided into two parts: basic repayment and proportional repayment. The basic repayment part stipulates that the first 200,000 yen that each creditor can receive will be paid in yen. As for proportional repayment, creditors can choose to repay in advance in one lump sum, or make mid-term and final repayments in installments.
For the portion exceeding 200,000 yen, creditors can choose to pay in a combination of BTC, BCH and yen, or pay the full amount in legal currency. If a lump sum payment is chosen, the creditor will only receive a partial payment. The installment payment method, although it takes several years, can get more compensation. In terms of payment methods, creditors can freely choose between cash and cryptocurrency.
In addition, due to the long time span, many creditors have sold their bonds to fund companies. Considering the possible interest rate cut at the end of the year, some funds may not sell these assets immediately.
3. How do you view the subsequent impact?
While the Mt. Gox repayment plan may bring some selling pressure to the market, there are several reasons why this selling pressure is unlikely to lead to a significant market decline:
1. Distributed compensation strategy: Mentougou's repayment plan adopts a distributed compensation strategy, allowing creditors to choose different compensation methods and times. This strategy helps to alleviate the selling pressure at a single point in time, allowing the market to digest this pressure more smoothly.
2. Gradually released selling pressure: Since the payment deadline is set at October 31, 2024, this means that creditors need to make payments over a longer period of time. This gradual release of selling pressure will help the market gradually adapt and reduce the risk of large price fluctuations in the short term.
3. Market expectations: Market participants had anticipated the repayment plan for the Mentougou incident and had digested the news to a certain extent. Therefore, when the actual compensation began, the market may have been prepared, reducing the possibility of a sharp drop in prices.
4. Other market factors: The cryptocurrency market is affected by many factors, including the global economic situation, policies and regulations, and technological innovation. For example, the US election and the consumer price index should be positive later this year. These factors may offset the negative impact of the Mentougou incident to a certain extent and keep the market relatively stable.
Long-term investors: Although there may be panic selling in the short term, long-term investors may see opportunities behind the Mentougou incident. As the market gradually stabilizes and recovers, these investors may buy on dips, thus supporting market prices.
IV. Conclusion
Whether it is FTX or Mt.Gox, or the recent theft of OKX and BN, they all emphasize the importance of security. Such incidents have also triggered some opinions that wallets kept by themselves are safer and do not use the exchange system. But in fact, the loss of personal wallet keys and theft by Trojans are also common in the industry, and it is difficult to protect rights.
As a professional asset management institution that has been deeply engaged in the field of crypto asset management for six years, 4Alpha Group has always emphasized that security and risk control are the primary considerations in asset management.
There is no doubt that with the development of the industry and the listing of ETFs, the crypto industry as a whole is moving towards standardization and compliance. 4Alpha Group calls on all parties in the industry to work together to strengthen supervision and self-discipline to create a safe and reliable investment environment for investors.
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