Mt. Gox, a former leader in the crypto markets and now, the enemy of many. After a hack which saw around 800,000 BTC stolen, the Mt. Gox story has gone from bad to worse, with the exchange now liable for making compensation payments to some of the victims who lost assets during the hack.
It’s quite a complicated situation, but the premise of it is that Mt. Gox have a lot of money to pay out, and many now fear that the payout will have a very adverse impact on the markets given that overall, the estimated cost of the payout comes to around $1 billion.
Kim Nilsson, a creditor of Mt. Gox has spoken to The Telegraph in order to discuss just how much of an impact this payout could have. We should bear in mind that Nilsson is of course entitled to a share of this payout, as one of the creditors who fell victim to the hack. According to Ethereum World News, Nilsson explained:
“If anybody or any group of individuals ever tried to liquidate Mt.Gox’s holdings to do payouts in fiat currencies, the market would crash. He based his prediction on the fact that there may not be enough demand for 170,000 BTC and BCH, so the selling of these digital assets would topple order books, pushing down the price of crypto assets across the board. It’s possible some people would try to instantly sell the Bitcoins as soon as they receive them, but it would probably be less than 100pc of the people doing it.”
What’s the threat?
In essence, many of the Mt. Gox creditors are a little disgruntled about Bitcoin. Since Mt. Gox are now going to be making the payments in Bitcoin and Bitcoin Cash, it is indeed very likely that these creditors will sell their Bitcoin straight away in order to take a cut of FIAT, a cut that should hopefully compensate for their losses as a result of the initial Mt. Gox hack.
The problem here is that huge waves of Bitcoin will be processed from Mt. Gox, and will then be sold off again, this could initiate two mass transfers that in turn will have a negative impact on the market. Big sell offs cause prices to fall, so, market-wide when other investors see a price collapse, they too are likely to try and sell off.
The opposite could of course happen. Creditors could receive the Bitcoin and continue to hold, their decision to sell will of course be impacted by the price of Bitcoin at the time of the ‘refund’. Therefore, in order to have less of an impact, we need to hope that Mt. Gox are able to make their payments when the price of Bitcoin is riding low, otherwise, if Bitcoin is high, a crash could be imminent.