There is good bitcoin news to report! The two largest creditors of Mt. Gox, a now-bankrupt crypto exchange, have opted to pay their outstanding debts in bitcoin received. The settlement of debts related to Mt. Gox is a process that has gripped many a BTC investor.
Payout in bitcoin does not mean an instant dump
The two creditors in question are the MtGox Investment Fund (MGIF) and Bitcoinica, a now-defunct New Zealand crypto exchange. CoinDesk writes this based on sources familiar with the case. They are expected to recover 90% of the outstanding debt in the form of bitcoin by September this year.
The creditors also had the option to wait for the full debt to be settled. However, they would then reportedly have to wait another 5 to 9 years for the entire process to be completed. They therefore prefer to opt for the faster payment of 90% of their debt.
The fact that this will happen in bitcoin is relatively good news. If they had opted for a cash payment, the bankruptcy trustee of Mt. Gox first had to sell a huge amount of bitcoin. The two creditors represent about 20% of all outstanding debts. So that would have had a nice impact. However, the two parties can of course always choose to sell their BTC in one go.
Debt mountain is shrinking, so smaller impact?
Mt. Gox was a bitcoin exchange from Japan that was founded in 2010. At its peak, it processed more than 70% of bitcoin transactions worldwide. In 2014, the exchange suffered a massive hack and went bankrupt, losing more than 850,000 BTC.
The creditors are now trying to get back what is left. This has caused some panic in the market for some time. This could cause a huge dump, resulting in a falling bitcoin price. Now that the two largest creditors receive their piece of the pie, the total mountain of debt will become smaller. The ultimate impact may therefore be reduced.
