The infamous Tokyo-based bitcoin exchange Mt. Gox was once regarded as the world's largest Bitcoin exchange in the early days, when Bitcoin was a fledgling industry. It was founded in 2010 by an American entrepreneur named Jed McCaleb.
In 2011, Mark Karpelès acquired Mt. Gox exchange from McCaleb. Karpelès being a programmer improved the dynamics of the newly acquired company greatly and an idea that started out as a trading site for the wildly popular Magic: The Gathering game cards evolved to become the world's most popular Bitcoin exchange, handling over 70% of all Bitcoin transactions in the world during its shortlived operation.
Wherever there is light, there will always be shadows to be found as well — as Mt Gox came into wider prominence, it became a victim of targeted attacks that eventually lead to the dissolution of the platform.
The first attack on Mt Gox came in the summer of 2011, few months after Karpelès took over the company. Attackers lifted about $8.75 million at the time, according to a report by Wired.com.
In early February 2014, the second Mt Gox hack became the representation of Bitcoin’s darkest chapter since its creation. It is by far the largest amount of Bitcoins ever stolen till date. The company declared that it had lost a total of 850,000 bitcoin: 100,000 of its own and 750,000 bitcoins owned by its customers, with a combined worth of about $480 million at the time.
It has been eight years since the occurrence of the biggest theft of bitcoins in history. Mt Gox creditors are unsure if they could ever get their bitcoins back. While 200,000 Bitcoins were retreived by Mt. Gox during the course of the investigation, a civil rehabilitation plan which aims to distribute the Mt Gox stash to the victims was approved by the Tokyo district court in 2021. The Japanese court had earlier halted the bankruptcy state of the former cryptocurrency exchange.
Traders are keeping a close eye on the movement of Mt Gox's fund citing concerns of market volatility as the distribution of the bitcoins to the creditors could trigger a massive sell off. Could this event trigger another flash crash that could potentially plunge BTC to $10,000?
Let's take a look at the daily Bitcoin trading volume from the top 3 exchanges on Coinmarketcap.
The biggest volume pairs for BTC add up to nearly $9 billion. If Mt Gox creditors decide to dump 140,000 BTC on the market, valued at $3.36 billion at a price of $24,000 per BTC, the potential for a severe impact on the market is probable.
Few months ago, before the sudden collapse of $LUNA, Terraform labs (TFL) liquidated about 80,000 units of its Bitcoin holdings valued at $2.4 billion at the time, to restore the Peg of its algorithmic stablecoin TERRAUSD (UST). Bitcoin lost 17% of its nominal value within a week.
Hypothetically, a 140,000 BTC dump could plunge the price of Bitcoin to figures below $15,000. This is another important chapter in the history of Bitcoin. An event that shook the cryptocurrency market eight years ago might yet again define the trajectory of the market.