Nobuaki Kobayashi, the Rehabilitation Trustee responsible for handling the Mt. Gox case has announced an extension of the repayment deadlines for creditors in a public letter.
Originally slated for October 31, 2023, the deadlines for the Base Repayment, Early Lump-Sum Repayment, and Intermediate Repayment have now been pushed forward by a year, with the new expected completion date set at October 31, 2024.
A Decade-Long Wait for Creditors of MT.GOX
Mt. Gox, the now-defunct cryptocurrency exchange, has been a prolonged saga for its creditors. The exchange suffered a major hack in 2014, resulting in the theft of 850,000 Bitcoin (BTC), valued at nearly $23 billion based on current prices.
Although some recovery efforts managed to retrieve around 20% of the stolen tokens, creditors have endured a lengthy and uncertain wait for resolution.
In a Thursday letter to “whom it may concern,” Kobayashi explained that the decision to reschedule was driven by the need for more time to manage complexities related to discussions and information sharing with banks, fund transfer service providers, and designated cryptocurrency exchanges.
These discussions are critical to the smooth processing of repayments. However, he emphasized,
“Please note that the schedule is subject to change depending on the circumstances, and the specific timing of repayments to each rehabilitation creditor has not yet been determined.”
For creditors who have promptly provided their necessary details, there’s a glimmer of hope as sequential repayments could potentially begin as early as the end of this year.
Market Implications of Mt. Gox Repayment Extension
The extension of the repayment timeline has naturally raised questions about its impact on the Bitcoin market. While it’s speculative, there are several factors to consider.
Under the rehabilitation plan, the Mt. Gox trustee is set to reimburse a substantial sum of 141,686 Bitcoin (BTC), 143,000 Bitcoin Cash (BCH), and 69 billion yen. Meanwhile, this massive reimbursement may not immediately translate into a linear market impact.
The repayment process is designed to be staggered, with the initial portion of each creditor’s claim paid in yen. Only for claims exceeding this sum can creditors choose between receiving 71% in cryptocurrency and the remaining 29% in fiat. This staggered and mixed-format repayment approach reduces the potential for a sudden influx of BTC into the market.
Furthermore, decisions made by significant creditors, such as Bitcoinica and the Mt. Gox Investment Funds, who represent approximately 20% of all claims, will influence market dynamics. Notably, Mt. Gox Investment Fund has already expressed its intent to hold onto its BTC rather than liquidate it immediately. These decisions by major creditors help alleviate immediate selling pressure on the market.