Bitcoin Dips as MT Gox Prepares Repayment

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Bitcoin has dropped below the support level of $42,000 as the MT Gox trustee sent another email regarding repayment.

"This e-mail is sent to you/your company to notify you/your company of the launch of the 'Repayment Status' and 'Repayment Status Details' display function," the email to creditors says.

Creditors can now log in to the system and at the bottom they will see a section regarding repayment details.

At this point, for most - if not all - it just says: "There are no details on Repayment Status now. Any updated will be displayed."

That means repayment is about to begin almost a decade since the once biggest bitcoin exchange went bankrupt in February 2014 following a hack.

The MT Gox trustee has 135,000 bitcoin and an equivalent amount of BCH. He also has about $650 million in fiat.

He sold $400 million between December 2017 and February 2018, and another $250 million between March and June 2018.

All creditors, whether they want to or not, will receive that $400 million in fiat (JPY). The $250 million was regarding a claim by Jed McCaleb, the billionaire founder of Ripple and MT Gox, who then sold it to Mark Karpeles.

For the remaining 135,000 bitcoin, out of an initial 200,000, creditors could choose distribution in fiat or in crypto. There are no hard data available, but the vast majority chose crypto. Some however did choose fiat.

The fiat heads are likely a very small minority, and in the absence of data we can go by the Pareto principle of 80/20.

That means the trustee either has sold or will sell an estimated 27,000 bitcoin, worth about $1 billion.

The MT Gox blockchain addresses are public and known, but they have been distributed to numerous 2,000 BTC addresses, so it has become difficult to easily and quickly track.

We do not know therefore whether he has sold, but the price action raises the possibility, with more blockchain analysis likely coming if there's confirmation of movement.

The email was just sent, though some noticed the Repayment Status was up this Friday.

On the $400 million that all creditors are to receive, regardless of their preferences, they will end up with only 25% of the bitcoin they would have received had they received it in bitcoin.

That's because bitcoin's price is currently more than 100% higher than when the cryptos were sold. In addition, they were sold in JPY, which has crashed by 50% against the euro and the dollar.

What they will receive in bitcoin is however significantly higher in fiat now than at the time they would have bought in 2013 by about 10x.

It's unclear whether both the fiat and the bitcoins will be distributed at the same time. A previous email suggested the fiat will be distributed first with it likewise unclear just how many of the creditors will turn some of that fiat into crypto.

As of publishing, no MT Gox creditor has yet claimed that they have received a payment.