Last week, the global leading cryptocurrency by the market capitalization size, Bitcoin, saw a massive plunge of almost 16%. The peak of this price decline fell on Friday, when BTC reached a bottom of $53,950.
A large catalyst which made this staggering price collapse happen was the fact that the non-operational cryptocurrency exchange Mt Gox began transferring Bitcoin with a goal of making refunds to its creditors.
This week, this exchange transferred almost $3 billion worth of Bitcoin to new wallets and it also started making payments to the creditors. Those creditors lost all their BTC in the course of several continuous hacks suffered by the Mt Gox exchange followed by its closure in 2014.
Mt Gox history in brief – the first ever crypto exchange hack
Mt Gox was the first cryptocurrency exchange in the world launched back in July 2010 (but it then traded only BTC). It was created by the person who later co-created the XRP Ledger and then Stellar blockchain – Jed McCaleb.
Initially, McCaleb created that platform to allow people trade Magic: The Gathering cards (this is what Mt Gox stands for – “Magic: The Gathering Online eXchange). Later on, it switched to trading Bitcoin instead and McCaleb sold the platform to Mark Karpeles who began to run it single-handedly on his laptop. By 2013, the exchange was processing more than 70% of all BTC transactions around the world.
Mt Gox underwent several big challenges throughout its short existence. The first large issue it faced was a major hacker attack in 2011. At that time, the cybercriminals managed to withdraw thousands of BTC coins from the platform. That case raised serious concerns regarding the security practices at Mt Gox. However, the cryptocurrency exchange still survived and moved on with its crypto trading operations.
The final collapse of Mt Gox took place in 2014. Back then, the platform suddenly suspended all BTC withdrawals referring to technical issues. Later, the company revealed that it had lost roughly 850,000 Bitcoins. In 2014, this amount of BTC was valued at nearly half a billion US dollars – $473 million. The loss was the result of a long-running hack that was unnoticed for several years. That hack was one of the largest security breaches in the history of the cryptocurrency space. It had a large impact both on the fate of Mt Gox and the Bitcoin ecosystem overall.
News about the massive loss of funds spread like wildfire. As a result, Mt Gox began to panic and rushed to start withdrawing their crypto from the platform. That triggered a liquidity crisis and soon the exchange filed for bankruptcy protection. The legal proceedings related to that continued for many years after that, which left Mt Gox in limbo and its former users as to what happened to their Bitcoins.
“Mt Gox dumps” impacting cryptocurrency market
The consequences of the Mt Gox crash are still sending ripples across the cryptocurrency market these days. The appointed bankruptcy trustee Nobuaki Kobayashi has been gradually selling what is left of Mt Gox’s remaining Bitcoin holdings in chunks over the past six years in order to compensate Mt Gox creditors for their financial losses.
These sell-offs became known in the cryptocurrency space as “Mt Gox dumps” and they are believed to be a major factor to Bitcoin price plummets that have been taking place since 2018 from time to time – the year when Kobayashi began Mt Gox Bitcoin sell-offs.
Every time the Mt Gox bankruptcy trustee dumps a large amount of Bitcoin on the market, it puts pressure on the market and the leading cryptocurrency sees a major but temporary price drop. Crypto traders closely watch these sales and they frequently change their trading strategies accordingly to benefit on potential BTC price movements.
The Mt Gox hack served as a warning not only for other cryptocurrencies that came to the market after it and crypto traders, stressing the importance of strong security strategies and measures to protect their cryptocurrency assets in the best possible way.
Recent Mt Gox Bitcoin transfers
This week news was spread by various media outlets about Mt Gox moving an astounding amount of Bitcoin to new wallets in order to start repaying its debts to the creditors. All-in-all, a whopping $2.7 billion worth of BTC (47,228 Bitcoins) was transferred by the exchange from its cold storage addresses.
Several transactions were performed on Wednesday – three separate chunks of Bitcoin were moved, according to the data company Arkham. Then the word was spread that repayments began to occur. The cryptocurrency exchange will disburse roughly 142,000 BTC and 143,000 Bitcoin Cash to the creditors. The CEO of the defunct exchange Mark Karpeles posted a tweet about that earlier this week, spreading the good news on X (formerly Twitter).
Currently, Bitcoin is trading at $57,900 after a minor price drop in the last 24 hours.
