Clients of Mt. Gox Exchange to Receive $9 Billion in Bitcoin: What Will They Do With It?

Clients of the Mt. Gox cryptocurrency exchange will be issued $9 billion in Bitcoin: how will they use it? Victims of the bankruptcy of what was once the largest cryptocurrency exchange have been waiting for compensation for 10 years. The market fears mass sales of the coins.

In the 10 days since the start of payouts in Bitcoin (BTC) and Bitcoin Cash (BCH) to clients of the bankrupt Mt. Gox exchange, approximately 13,000 victims have received compensation. However, billions of dollars in cryptocurrency still remain in the exchange's wallets, according to a statement from Mt. Gox.

The size of the total compensation and potential selling pressure on the price of Bitcoin are causing concerns among market participants. It is assumed that a significant portion of the coins might be sold by clients on the open market after compensation.

Operating from 2010 to 2014, Mt. Gox was the largest cryptocurrency exchange in the world, handling over 70% of all Bitcoin trading volume. However, a series of hacker attacks led to the loss of 850,000 BTC, which at today’s rate amounts to over $50 billion.

In 2014, Mt. Gox declared bankruptcy, and only in 2021, after nearly 8 years of legal proceedings, was a rehabilitation plan developed for affected clients. By the end of 2024, Mt. Gox's administrators announced their intention to distribute the remaining funds amounting to 142,000 Bitcoins (about $9 billion at the end-of-June rate), 143,000 Bitcoin Cash coins (approximately $53 million), and 69 billion Japanese yen. The first yen payouts were received by users only at the end of 2023, and the distribution of cryptocurrencies began only in July 2024.

Bitcoin compensations are being distributed through exchanges Kraken, Bitstamp, BitGo, and Japan’s Bitbank. According to agreements with them, they will have several weeks on average to transfer funds to clients. However, when the first batch of coins was transferred to Bitbank, its clients reported receiving the funds on the same day via social media.

Bitstamp announced that they would start transferring Bitcoins to Mt. Gox clients as soon as they are credited to the exchange's wallet. Under the terms of the compensation distribution to affected Mt. Gox clients, Bitstamp will have 60 days for payouts, but its representatives stated that they would not delay the credits.

On July 17, Kraken announced that it had received funds for distribution to Mt. Gox clients, stating that it would take one to two weeks to issue the compensations. Experts from Arkham claimed to have found the wallet address where the assets are presumably stored. As of July 18, the wallet contained Bitcoins worth $3.15 billion.

In total, the group of wallets controlled by Mt. Gox administrators still held 90,000 Bitcoins worth $5.85 billion, according to Arkham as of July 18. Market observers monitor any activity on these wallets, as large transfers have repeatedly caused market reactions, creating volatility in the Bitcoin price.

• Will the Bitcoins Be Sold Immediately?

A poll among 467 participants in the Reddit forum thread for Mt. Gox compensation recipients showed that 55% of them do not plan to sell the received Bitcoins immediately. 88 voters (19%) indicated that they would sell the coins immediately, while 68 people said they would sell up to 25% of the compensation.

Experts from K33 estimated the selling pressure to be between 75,000 and 118,000 Bitcoins throughout the summer, expecting these flows to impact the dynamics only in the coming months and that unstable market conditions would last only until October.

Experts interviewed by  estimate the sales to be between 60,000 and 65,000 coins, reminding that these transactions will be spread over several months since not all Mt. Gox clients will receive their assets immediately. However, the very fact of large sales can exert significant emotional pressure on buyers.