Last week, there was anticipation that the now-defunct Mt Gox, once the biggest Bitcoin exchange in 2013, may refund 150,000 Bitcoin. However, based on previous delays in refunding lost user funds, that would not likely happen anytime soon.
The extension granted by the Tokyo Court to submit a rehabilitation plan to the Mt. Gox trustee is not the deadline to refund Mt. Gox clients. Therefore, even if the trustee meets the deadline, Mt. Gox refund may be a long process.
In the biggest hack ever happened in Bitcoin history, Mt. Gox lost 850,000 Bitcoin from 2011 to 2013. The company discovered the lost BTC in February 2014 and filed for bankruptcy in the same month.
A trustee controlled the process of recouping lost funds for users ever since. The process has continuously been delayed over these years.
The 150,000 BTC figure comes from Brock Pierce, who aimed to revive Mt. Gox in 2019. Pierce told TechCrunch that there is 150,000 BTC in the Mt. Gox bankruptcy trust, which he wants to distribute to the respective owners. The sum is equivalent to around $1.695 billion at the current BTC price of $11,300.
On June 30, 2020, the Tokyo District Court issued an order to “extend the submission” of the Mt. Gox trustee’s rehabilitation plan. The extension granted by the Tokyo court was until October 15.
Considering previous deadline extensions, the trustee will possibly continue to postpone until it is fully ready.
As such, until the trustee shows meaningful progress in the refund process, it is premature to expect 150,000 Bitcoin to flow into the Bitcoin market.
If the stolen BTC gets refunded, its potential impact on BTC is uncertain
Even if Mt. Gox can refund 150,000 stolen Bitcoin, its potential impact on Bitcoin is difficult to gauge.
The common argument is that it would make notable selling pressure on BTC in a short period. But, that assumes that the refundees would immediately move to sell the refunded Bitcoin.
But, in an interview, on-chain analyst Cole Garner said that if Mt. Gox clients get refunded, they might not necessarily sell.
Garner said that Mt. Gox clients went through three Bitcoin bull markets throughout the past seven years. He said that the users are likely to remain patient, especially if they think a new bull cycle might be emerging.
“Every single person who held bitcoin in Mt Gox has lived through three bitcoin bull markets — where all three times price multiplied by a factor of at least 10. Few will have an easy time selling now, right as the next bull market is just getting started. If you’ve been waiting to get your bitcoin back since 2014, then you know a thing or two about patience. Patient sellers who move markets know selling all at once is a terrible way to maximize profits,” Garner added.
The analyst also said that users that held Bitcoin on Mt. Gox likely made them from mining. Given that they are likely to be early miners, they most likely have in-depth knowledge of game theory.
“If you lost bitcoin in Mt Gox, then you probably made that bitcoin as an early miner, which means you probably know a thing or two about game theory. Game theory says if lots of people who can move markets are selling, then price is going down — an inopportune time to sell,” Garner added.