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Mt.Gox Bitcoin Distribution: A Decade-Long Legal Saga Reaches Its Climax

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After more than a decade of legal proceedings, the long-awaited distribution of Bitcoin recovered from the Mt.Gox exchange collapse is finally underway. According to the latest report from Glassnode, the total recovered coin volume was over 141,686 BTC, with just under 59,000 BTC now redistributed to creditors and another 79,600 BTC soon to follow.

Kraken and Bitstamp have been designated as the exchanges responsible for redistributing these funds. Kraken has received 49,000 BTC, and Bitstamp has received the first tranche of 10,000 BTC.

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Source: Glassnode

Details of the Bitcoin Distribution

The scale of these distributions is already larger than other significant events, such as ETF inflows, issuance to miners, and sell-offs by the German Government. However, the long history of creditors trying to recover their coins paints a picture of their likely behavior moving forward. Many creditors opted to receive BTC instead of fiat, a new approach in Japanese bankruptcy law, suggesting they might be long-term holders.

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Source: Glassnode

The sell-side pressure from the German Government in late June was significant, with over 48,000 BTC sold within a month. Despite this, the market absorbed the supply and managed to rally from $53,000 to over $68,000. Throughout the Mt.Gox distribution, the Bitcoin price has remained between $66,000 and $68,000, indicating a lighter-than-expected sell-side pressure and resilient demand.

This behavior aligns with the broader market trend. Bitcoin bull markets naturally attract sell-side pressure as higher prices incentivize long-term holders to take profits. However, the recent data shows a gradual return to a HODLing dominant behavior, with long-term investors holding onto their coins. The proportion of wealth held by new investors is declining, indicating a shift back towards long-term holding and a slowdown in new demand since the $73,000 all-time high.

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Source: Glassnode

Long-term holders currently possess 45% of the network’s wealth, a relatively high figure compared to past market cycles. This underscores the strong HODL mentality among these investors, who seem to be waiting for even higher prices before selling.

As the supply of long-term holders increases and the supply of short-term holders declines, the Bitcoin market appears to be in a phase dominated by high-conviction investors committed to holding their assets for the foreseeable future.

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Source: Glassnode

Related Reading | Bitcoin in Reserves? Hong Kong Lawmaker Sparks Bold Debate

Mt. Gox’s $9.6 Billion Bitcoin Transfer Shocks Market

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Mt. Gox, the infamous bitcoin exchange that collapsed in 2014, has made a significant move in the cryptocurrency world by transferring at least $9.6 billion worth of bitcoin to an unknown address. According to data from Arkham Intelligence, the exchange transferred 42,830 BTC, valued at approximately $2.9 billion, from its cold wallets. This marks the first time in five years that Mt. Gox has moved assets out of its wallets.

The transactions took place in multiple steps and were completed by 11:00 am Hong Kong time on Tuesday. Despite the large transfer, Mt. Gox still retains about $9.42 billion worth of bitcoin in its identified wallets, as tracked by Arkham.

This recent activity comes amidst ongoing uncertainty and delays in the repayment process for Mt. Gox’s creditors. In September 2023, the trustee overseeing the repayment process announced that the deadline for repayments had been extended by 12 months to October 31, 2024. This delay has frustrated many creditors who have been waiting for compensation since the exchange’s collapse a decade ago.

Mt. Gox’s sudden transfer has sparked speculation within the cryptocurrency community. Some analysts suggest that this move could be part of a strategy to prepare for the eventual repayment to creditors, while others believe it might be an attempt to secure the assets more effectively amid the volatile market conditions.

From Bitcoin Giant to Bankruptcy

The defunct Tokyo-based exchange, which was launched in 2010, rose to prominence quickly and became the largest bitcoin exchange by 2013, handling approximately 70% of all bitcoin trades worldwide. However, its downfall was swift and severe. In early 2014, Mt. Gox suspended trading and halted all withdrawals, leading to the site’s closure and a subsequent bankruptcy filing. The company reported that over 800,000 bitcoins, valued at around $450 million at the time, had been lost, allegedly due to hacking.

The Mt. Gox trustee has not responded to requests for comments regarding the recent transactions. As the cryptocurrency world watches closely, the fate of Mt. Gox’s remaining assets and the long-awaited repayments to its creditors remain uncertain. This latest move by Mt. Gox adds another chapter to the complex and turbulent history of one of bitcoin’s most notorious exchanges.

10,000 Bitcoin Linked to Mt. Gox Hack on the Move

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On November 23, a total of 10,000 Bitcoin, which are currently worth over $165 million, were transferred from a crypto wallet that belonged to the defunct cryptocurrency exchange BTC-e to various exchanges, individual wallets, and other sources.

While this pullout is the largest made by BTC-e since April 2018, a Chainalysis report on November 23 suggested that BTC-e and WEX, an exchange that is believed to be BTC-e’s successor, both sent small amounts of BTC to the Russian electronic payments service Webmoney on October 26 before making a test payment on November 11 and sending out an additional 100 BTC on November 21.

10,000 Bitcoin moved to personal wallets

9,950 BTC of the total sent amount is believed to still be in individual wallets, with the remaining BTC being transferred through middlemen and ending up at four deposit addresses on two significant exchanges.

Ki Young Ju, co-founder, and CEO of the blockchain analytics company Cryptoquant confirmed the findings and pointed out that 0.6% of the funds were sent to exchanges, which might be sell-side liquidity.

Young Ju shared images of the transfer and noted that the BTC had been in the wallet for more than seven years in a tweet on November 24.

Additionally, Young Ju called for the account to be suspended for questionable activity and disclosed that 65 BTC had been moved to the cryptocurrency exchange HitBTC.

A Tokyo-based cryptocurrency exchange called Mt. Gox once handled more than 70% of all Bitcoin transactions. After being hacked in 2014 and has thousands of Bitcoins stolen, the exchange soon declared bankruptcy.

After claims that BTC-e was engaged in money laundering, including the use of cryptocurrency taken during the Mt. Gox exchange hack, the Federal Bureau of Investigation (FBI) shut down BTC-website e’s and seized funds in 2017. BTC-e had US-based servers.

BTC-e reportedly held “a substantial amount of Bitcoin” at the time of its shutdown, and in April 2018 it moved more than 30,000 BTC out of its service wallet.

The owners of BTC-e made an effort to maintain their anonymity, but it is believed that Alexander Vinnik is the main operator and has been involved in legal disputes for the past five years.

According to a 2017 WizSecurity report, BTC-e and Vinnik were directly involved in the theft of user funds and bitcoin from Mt. Gox, with the latter being forced to halt trading and shut down its website as a result of the losses.