03 Oct Mt Gox fraud still ripples through bitcoin market today
In February 2014, the infamous Tokyo-based Mt Gox cryptocurrency exchange was hacked and more than 850,000 bitcoins worth an estimated $473 million at the time were stolen.
Today, those bitcoins would have a market value of more than $5 billion. That’s part of what makes the receivership and bankruptcy proceedings such a challenge.
More than four years later, the impact of the notorious cybercrime is still being felt in the digital coin markets.
Mt Gox receiver sales continue
In a September 25, 2018 statement, the bankruptcy receiver for Mt Gox provided an update on the sale of stolen bitcoins and efforts to liquidate assets for former account holders.
Between the creditors’ meeting on March 7, 2018, and the start of civil rehabilitation proceedings on June 22, 2018, trustee Nobuaki Kobayashi provided an update on the sale of assets.
24,658 bitcoin and 25,331 bitcoin cash were sold bringing in an estimated $230 million or an average of $8,100 for each bitcoin according to Bloomberg.
The trustee has earlier sold more than $400 million of bitcoin and bitcoin cash into the marketplace prior to this latest reporting. It’s the large-scale sales and the impact on bitcoin prices that is so controversial with investors around the world.
Mt Gox “whale” sales contentious
Because of the large size of bitcoin holdings and the effort to sell the assets back into the market, Kobayashi is considered a “whale” whose large sales potentially impact the value of bitcoins significantly.
Many investors claim Kobayashi collapsed prices by selling on spot markets, rather than selling in an auction or over-the-counter platform the way other large investors and institutions typically sell assets.
The market value of the cryptocurrency in 2018 has been in a constant downtrend until recent months when a slight recovery stabilized bitcoin values recently at around $6,400.
Kobayashi denied the claims in an earlier report, writing: “Upon consultation with cryptocurrency transaction experts, Bitcoin and Bitcoin Cash were sold in a manner that had no effect on market price and not by ordinary sale on an exchange while ensuring the security of the transaction to the extent possible.”
How the most recent cryptocurrency sales occurred has not been disclosed.
In June 2018, creditors won a case in Tokyo District Court that changed proceedings from a bankruptcy into a civil rehabilitation proceeding that may allow creditors to receive their payment in bitcoin and therefore at significantly higher value.
Much depends on the future value of bitcoin and bitcoin cash and the volatile cryptocurrency markets.
Meanwhile, it’s all eyes on the “Tokyo Whale.”