Billions in Bitcoin from Mt. Gox being repaid: The complex journey and market impact

As early as next week, creditors of Mt. Gox, who lost 850,000 Bitcoin more than ten years ago, might receive their money back, according to Kraken.

According to an email sent by Kraken to users, at least some creditors of Mt. Gox should receive their repayments in the next seven to fourteen days.

Along with Bitstamp, Kraken is one of the five cryptocurrency exchanges collaborating with the Mt. Gox trustee to help distribute Bitcoin to the creditors of the now-defunct exchange.

The conversation affirmed the legitimacy of the email, which has been circulating on Twitter. Regarding whether its distribution will be in line with other coordinating exchanges, Kraken remained silent.

A Kraken spokesperson said that clients have been asked to expect funds to be credited to their accounts within the next 7-14 days via email.

Moreover, the announcement was made more than ten years after Mt. Gox collapsed due to a significant hack and a string of legal problems. Mt. Gox, formerly the biggest Bitcoin exchange in the world, is scheduled to reimburse creditors for billions of dollars' worth of Bitcoin.

According to Bitstamp's agreement with the Mt. Gox trustee, the company has up to 60 days to distribute Bitcoin to creditors, as it was disclosed to Decrypt earlier this month. Bitstamp, however, promised to process payments "as soon as possible."

Bitcoin experienced a brief decline earlier in the morning following the transfer of $2.8 billion into a cold storage wallet via the trustee's wallets. Subsequently, that wallet transferred $3 billion to an unidentified wallet.

According to CoinGecko data, as of this writing, Bitcoin is trading for $63,914.15, up 2% from this time yesterday.

Notably, Kraken's creditor email and transfers are taking place precisely 14 years to the day shortly after Mt. Gox completed its very first trade.

The company lost 850,000 Bitcoin in 2014 as a result of an exploit. Customers owned at least 90% of the lost Bitcoin. It is not clear how much of the 850,000 Bitcoin will be returned to creditors, but it is unlikely that all of it will.

Kraken stated in its email that the Mt. Gox trustee has already decided how much each creditor will receive, but it did not disclose the entire planned distribution.

Investors anticipate that creditors will liquidate at least some of the Bitcoin they were given back. This is just one of several things that have recently caused the cryptocurrency market to decline.

FxPro Senior Market Analyst Alex Kuptsikevich noted that although the amounts appear large initially, it's important to remember that not all those cryptocurrencies are available for sale.

He explained that the money will go to early crypto enthusiasts rather than authorities obligated to sell BTC. Kuptsikevich estimated that actual transfers from crypto to fiat might only be around 20-30%.

However, according to some analysts, the sale of seized assets by the German government and the resolution of the Mt. Gox scandal will "probably" signal the bottom of the Bitcoin market.

A step forward for crypto regulation and trust

Mt. Gox's repayment plan could pave the way for more regulated and trustworthy exchanges, which is crucial for attracting institutional investors and mainstream adoption of cryptocurrencies.

It also highlights the importance of secure custody and transparency in the crypto ecosystem, ensuring that users can trust exchanges with their assets.

Furthermore, as the distribution process continues, market participants should keep a watchful eye on potential price movements from creditor sales. The process also underscores the importance of strong regulatory frameworks that prioritize investor protection and asset security.

As creditors await their compensation, many are hoping for a return to normalcy and closure on this long-standing chapter in the crypto industry's history. Regardless of how the situation unfolds, the lessons learned from Mt. Gox's collapse will continue to shape the future of cryptocurrency exchanges and the broader digital asset market.