Traders and the Bitcoin community have been angered that the Mt Gox trustee has been dumping bitcoins that were left over from the collapsed exchange on the coin market. Mt Gox was one of the earliest exchanges which was founded in 2010 but went under in 2014 after $450 millon worth of bitcoins was stolen from the exchange. The hack made the company which was the biggest exchange to declare bankruptcy and the funds left were entrusted to a Tokyo based attorney to manage.
Nobuaki Kobayashi, the attorney in charge of the Mt Gox funds said that he sold off $400 million worth of the Mt Gox Bitcoins on February 5. A day later, Bitcoin prices crashed to a three month low of $6,400.
The coins in custody of Kobayashi was placed in trust to pay back investors who lost money in the exchange. It seems that the attorney is determined to sell them off in exchanges to maximize profits.
This has raised concerns among crypto enthusiasts on why such a large volume of cryptocurrency should be dumped on the market at a time. Kobayashi is in possession of 166.000 bitcoins and there have been discontent at having such a high volume of coins pushed into the coin market. The effect which obviously would be price dip. This has always been the effect of having so much coin in the market at the same time.
Possessors of large volumes of coins such as the US Marshal Service usually sell off bitcoins through auctions to avoid market disruptions. The Mt Gox sales have been going on since September with the market absorbing it. However, it is obvious that the February 5 sales happened at a time Bitcoin prices were already under pressure, having fallen to $10,000 from nearly $20,000 in mid December.
Some commentators within the Bitcoin community are of the view that the trustee should pay the Mt Gox Investors in bitcoins and let them decide how to use it instead of selling in the open exchange. There is a consensus among traders that the trustee must find other avenues of distributing the bitcoins in his possession which is still worth more than $1.9 billion.
Japanese bankruptcy law demands that after the sale of the bitcoins, the balance should be given to MtGox founder, Mark Karpeles, who is on bail for embezzlement.
Bitcoin fortunes seem to have been affected by a series of news last week. The Financial Services Agency of Japan had earlier suspended the operations of two exchanges for one month. One of the exchanges, Bit Station was reported to have been sanctioned because a manager diverted investors funds to personal use. The FSA also instructed that other half a dozen exchanges improved their services. One of the exchanges, Coincheck was hacked weeks ago and had $500 million worth of XEM, the NEM currency stolen. Even though reports from Coincheck says that the exchange has enough funds to pay back customers, negative news have ways of impacting strongly on the market.
