Yesterday, new developments in the Mt. Gox incident caused BTC to break through $60,000, causing panic among many new crypto players. What is going on?
Let us first briefly introduce the Mentougou incident.
In February 2014, Mt.Gox, a trading platform that accounted for about 70% of BTC trading volume at the time, ceased operations. Not long after, it announced that about 850,000 BTC were stolen in a hacker attack, including 100,000 BTC from the Mt.Gox platform and 750,000 BTC from users.
At that time, BTC was about $600. 850,000 BTC was about $510 million.
Later, the court ruled that Mentougou had to use the remaining assets in its hands to compensate users, which was about 140,000 BTC. Currently, BTC is about $60,000. This batch of BTC is worth about $8.4 billion.
Roughly estimated, the users whose assets were stolen at that time were passively locked up. Although they were not compensated for the amount they lost, they could earn at least 16 times the amount after receiving the compensation in legal currency, which took 10 years. Why not run away after earning 16 times the amount? This huge amount of BTC waiting to be ruthlessly sold has become the sword of Damocles in the crypto market.
In the past, most of the new news about the Mentougou compensation often caused panic in the market and triggered a short-term decline in BTC.
The following is a timeline of the Mentougou incident and compensation compiled by Followin.
# In 2014, Mentougou was robbed.
# In 2019, the Tokyo District Court ruled that Mentougou should deliver the recovered 141,000 BTC to a trust for safekeeping and initiate compensation procedures. The debtor holds approximately 142,000 BTC, 143,000 BCH and 69 billion yen.
According to crypto media Protos, Mentougou compensation is highly concentrated in the hands of large holders, with 226 claimants holding more than 50% of the claim amount.
# In September 2023, Mentougou extended the repayment originally scheduled for October 31 of that year to October 31, 2024. This year, Mentougou entered the formal repayment stage.
# In November 2023, the bankruptcy liquidator Nobuaki Kobayashi informed users by email that he was working hard to start cash repayments in 2023. In the following months, many creditors claimed to have received repayments in the form of Japanese yen, US dollars, etc., but none of them involved crypto assets such as BTC.
# On May 28, 2024, the Mentougou deposit address transferred all 141,680 BTC to multiple addresses, presumably in preparation for repayment. This is the first time that the address has moved a large amount of BTC in 18 years.
It is reported that there are two options for claims: Option 1 is to repay BTC and BCH to creditors at a designated exchange, and Option 2 is to sell tokens and then repay.
# On June 24, 2024, the Mentougou Compensation Trustee stated that it was ready to repay in BTC and BCH. Now that these preparations are in place, the trustee will begin to repay BTC and BCH to cryptocurrency trading platforms that have completed the exchange and confirmed the required information at an appropriate time. Repayment will begin in early July 2024.
# October 31, 2024 is currently the tentative final repayment deadline for Mentougou.
At present, the BTC equivalent of the compensation paid by Mt. Gox is worth more than 8 billion US dollars, and the BCH equivalent is about 50 million US dollars. In comparison, the US BTC spot ETF holdings are about 20 billion US dollars.
Is the Mentougou compensation a bad thing or a good thing? What do practitioners think?
【Chuanmu@xiaomucrypto】
Mentougou’s compensation is equivalent to Binance listing two new coins. Binance listed dozens of coins in the first half of the year and nothing happened. It’s a relief.
【Phyrex@Phyrex_Ni】
740,000 BTC were stolen, but now only 140,000 BTC can be compensated, and each user can only get about 19% of the compensation. Many investors currently predict that this will bring price pressure, especially for BCH.
Because BTC has "debt acceptance", similar to FTX's packaged sale of debts, it can sell assets that cannot be accepted at a discounted price in advance. In simple terms, some people felt that Mentougou's compensation time was too long, so when they learned that they could get 100 BTC, they were willing to sell the debt for 90 BTC or a lower price to get "compensation" in advance (not real Mentougou compensation).
Therefore, in fact, a lot of BTC is already in the hands of institutions, but the exact number is impossible to verify.
The letter said that compensation will be made gradually. Although we don’t know how long this period will be, it should not be too short. Therefore, even if all BTC are being sold, the daily selling pressure will not be very large. If it is divided into ten days, then it will be around 14,000 BTC per day, which is not an exaggeration.
Of course, the current sentiment and liquidity are indeed worse, but the focus still needs to be on the subsequent macroeconomic situation. Friday's PCE, next Friday's non-farm payrolls, and mid-month CPI will all affect sentiment and on-site funds. If these data are better than expected, then Mentougou's impact on the market will be reduced to a minimum. If these data are not good, then Mentougou's impact will inevitably be magnified.
But no matter what, judging from the actual data, Mentougou's direct impact on the market is very limited.
Alex Thorn@intangiblecoins (Head of Research at Galaxy)
The number of tokens ultimately distributed in the bankruptcy case will be smaller than people think, and the resulting selling pressure on Bitcoin will be smaller than expected.
About 940,000 BTC were lost that year, worth $424 million at the time, and 15%, or 141,868 BTC, has been recovered so far. But for creditors calculated in US dollars, this is a 140-fold gain.
In order to obtain early payment, many creditors have suffered a loss of about 10% and transferred their claims. We believe that about 75% of BTC holders have chosen this option.
There are 95,000 BTC left. About 20,000 BTC will be allocated to the fund claimants, and 10,000 BTC will be allocated to Bitcoinica BK. There are about 65,000 BTC left to be allocated to individual creditors, which is much lower than the 141,868 BTC previously released by the media. Therefore, the number of tokens allocated for compensation will be lower than market expectations.
There is reason to believe that creditors clearly favor long-term Bitcoin holders. They are tech-savvy early adopters. Assuming only 10% actually go to exchanges to sell, that's 6,500 coins.
