The two largest creditors of Mt. Gox, the now-defunct cryptocurrency exchange, have opted to receive most of their bankruptcy recovery payout in Bitcoin, according to a report citing people familiar with the matter.
The report stated that 90% of their collectible funds would be paid out in BTC to Bitcoinica and MtGox Investment Funds (MGIF), which together make up around a fifth of all Mt. Gox claims.
Creditors have been waiting for almost a decade to receive a portion of their funds after the 2014 hack of Mt. Gox, which resulted in the loss of 850,000 BTC valued at $460 million at the time. After the attack, Mt. Gox was left with around 142,000 BTC, 143,000 bitcoin cash (BCH), and 69 billion Japanese yen.
Opting for Bitcoin Payout Soothes Market Concerns
By choosing the non-fiat option, it is believed that this decision will calm the longstanding anxieties of bitcoin holders who were concerned that coordinated liquidations associated with the Mt. Gox bankruptcy recoveries could have a negative impact on the value of Bitcoin.
If the two creditors in question had selected a fiat payment, it is probable that the administrator responsible for the bankruptcy estate would have had to sell off a substantial amount of the bitcoin holdings that were recovered from Mt. Gox to meet all the payment requests in fiat.
By choosing to go with Bitcoinica and MGIF, a substantial portion of the total claim has been removed, which is likely to prevent any future disputes.
Creditors who choose the early lump sum alternative have the option to receive their payment in a combination of BTC, BCH, and yen, or they can request the entire amount to be paid in fiat.
However, creditors can either accept the early lump sum payment of 90% of the amount owed or wait for the conclusion of civil rehabilitation litigation, which includes a lawsuit by CoinLab against Mt. Gox’s estate.
Although waiting may result in a slightly higher recovery, there is no guarantee that it will not be lower than the early lump sum payout.
A legal analysis indicates that holdouts may have to wait several years for their money to be returned, and creditors must decide by March 10 whether to accept the early lump sum or wait.
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