Why Bitcoin is falling as Mt. Gox says repayments for stolen assets to begin next month

By Frances Yue

Mt. Gox holds over 140,000 bitcoins. Investors recouping stolen assets could cash in on the rally over the past decade.

Bitcoin fell on Monday after bankrupt crypto exchange Mt. Gox said it would soon start repaying crypto to creditors who lost assets in a hack of the defunct platform more than a decade ago. The payments are expected to start in July and be made in bitcoin and bitcoin cash.

The largest cryptocurrency (BTCUSD) by market capitalization declined 4.5% on Monday to around $61,242, according to Dow Jones Market Data. It traded at as low as $60,723 on Monday. Bitcoin is up over 45% year to date, but is more than 17% lower from its all-time high at $73,798 reached in March.

If bitcoin falls below its $60,000 trading support range, its next support levels is expected to be $51,500, according to Will Tamplin, senior analyst at Fairlead Strategies.

Launched in 2010, Mt. Gox was one of the earlier crypto exchanges and once the biggest digital asset exchange in the world. It was hacked in 2011, with over 600,000 bitcoins stolen, and the platform went bankrupt in 2014. Last year, the Justice Department charged two Russian nationals with conspiring to launder bitcoins from their hack of Mt. Gox.

Mt. Gox said in September of last year that the exchange faces a deadline on Oct. 31, 2024 to make basis repayments, early lump-sum repayments and interim repayments.

Of note, some Mt. Gox investors said earlier this year that they already received some cash payments for stolen assets, but repayments in bitcoin and bitcoin cash are due to begin next month. As of Monday, the exchange held about 141,687 bitcoins, which were worth roughly $8.7 billion, according to data from Arkham Intelligence.

Investors are concerned that Mt. Gox's creditors could choose to sell bitcoins they receive, putting pressure on the crypto, because bitcoin now trades at a much higher price than it did a dozen years ago.

Still, there is little activity in the July options market, showing that the market is not anticipating volatility around the distribution itself, according to analysts at QCP Capital.

-Frances Yue

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06-24-24 1141ET

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