Kraken Concludes BTC and BCH Distribution to Mt Gox Creditors

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Image by A M Hasan Nasim from Pixabay

San Francisco-based cryptocurrency exchange Kraken has finished distributing Bitcoin (BTC) and Bitcoin Cash (BCH) to creditors of the defunct Mt. Gox. Kraken CEO Dave Ripley made the announcement on X, signaling a near end to the Mt. Gox repayment plan.

Last week, a story from cryptocurrency news and update website cryptonews.com, which publishes up-to-date and comprehensive cryptocurrency and blockchain news stories, confirmed that Kraken had received funds from the Mt. Gox Trustee and was preparing to distribute the funds to verified creditors. At the time, Kraken sent emails to prospective recipients, noting that the disbursement process would take between 7 and 14 days.

"It’s been nearly a decade since Kraken was selected by the Trustee to facilitate the investigation and return of client funds. It was our privilege and it was our duty," Ripley wrote on X.

In follow-up posts, the Kraken CEO explained that although it has been involved in the process for quite some time, "frivolous lawsuits" prevented earlier payments. Thanking the Trustee for safekeeping and hodling most of the assets the entire time, Ripley promised that Kraken remains committed to contributing to a financially free and inclusive world.

Another major crypto exchange, Bitstamp, announced that it received Mt. Gox assets and will soon begin distribution, noting that it needs up to one week for security checks.

Mt. Gox was a Japanese cryptocurrency exchange, once one of the largest worldwide. At its peak, the exchange was responsible for more than 70% of all Bitcoin transactions. However, Mt. Gox filed for bankruptcy in February 2014 after it lost about 950,000 Bitcoin after multiple breaches. According to current prices, the total amount lost is more than $62.1 billion.

Following announcements of upcoming payments, many observers and stakeholders worried that the refunds to creditors would cause selling pressure in the Bitcoin market. For instance, the chief investment officer of crypto firm Ledn told CNBC that the payments would trigger heavy Bitcoin sales. According to John Glover, some people will cash out and enjoy their indirect and long-term investment in Bitcoin. JPMorgan analysts also shared a similar opinion in a note to investors. The analysts believe that crypto prices will come under pressure, although short-lived.

However, some stakeholders disagree. Raghuram Vadapally, a senior fixed-income analyst at Carson Capital, said that while there will be some selling, it will not cause a "crazy sale." Vadapally said people are unlikely to dump because they have already made huge profits.

Despite the concerns about selling pressure, blockchain data shows that creditors are not selling. According to Ki Young Ju, the CEO and founder of on-chain and market data analytics service CryptoQuant, there has been "no significant spike" in Bitcoin outflows or hourly spot trading volume dominance on Kraken since the exchange paid out the funds. Ju described it as a "positive sign." 

Corroborating Ju’s outlook is CryptoQuant data revealing a reduction in Bitcoin exchange reserves. The data shows that although the price of Bitcoin has been on the rise since the year started, exchange reserves have continuously declined. This may suggest that holders are moving their BTC out of exchanges.

An accurate picture of Mt. Gox repayments and their effect on the Bitcoin market may take some time to materialize. However, as of now, there has been no significant change in the market and no shifts in usage or adoption, whether for Bitcoin payments, international remittances, crypto gambling, or other crypto-related sectors.