Breaking: Court Moves Mt Gox Case to Civil Rehabilitation, Creditors to Be Paid in BTC

  • The Tokyo District Court has moved Mt Gox's case from criminal bankruptcy to civil rehabilitation.
  • This means creditors won't be paid in JPY, but in BTC.
  • The trustee, who still holds over 137,000 BTC, likely won't trigger another sell-off until mid-2019 when creditors get paid.

The Tokyo District Court has reportedly moved the infamous Mt Gox case out of criminal bankruptcy into civil rehabilitation, meaning creditors will likely be paid in BTC in mid-2019, and that the exchange’s trustee won’t likely sell funds anytime soon.

According to a document published on Mt Gox’s website, the process is set to start early next year, and is mostly good for the cryptocurrency ecosystem. Mt Gox was notably a dominant cryptocurrency exchange that collapsed in 2014 amid claims of insolvency and security breaches.

At the time, hundreds of millions of dollars worth of BTC were lost, which saw the cryptocurrency’s price to crash. Recovery efforts managed to find 200,000 BTC, which were then held by the exchange’s trustee, Nobuaki Kobayashi.

Had the cryptocurrency exchange’s case remained in criminal bankruptcy, creditors would have been paid back in fiat currency, equivalent to bitcoin’s exchange rate at the time Mt Gox went down – less than $500 per coin.

Since 2014, bitcoin has appreciated to over $6,100. The exchange’s former CEO Mark Karpeles, who was charged with embezzlement and data manipulation, would’ve received most of the remaining proceeds.

Karpeles, as CryptoGlobe covered, has stated he doesn’t want said funds, which amount to about $1 billion. At the time, he said he never expected to received anything from the bankruptcy, and that it is an "aberration" that it was a possibility, adding that he believes it is his responsibility to make sure it doesn't happen.

Given that the case was moved to civil rehabilitation, Kobayashi is set not to sell any more bitcoin until creditors are reimbursed next year. As for cryptocurrencies created through bitcoin’s various forks – including BCH, BTG, and BCD – the document states:

At present, nothing has been determined regarding the sale of Bitcoin and cryptocurrencies split from Bitcoin (collectively, “Bitcoin, etc.”) in the future.

Mt Gox

How creditors will be reimbursed isn’t yet clear, and will likely be determined in subsequent legal proceedings. Mt Gox’s creditors will be required to refile proof of claim forms by October 22, 2018. This applies to all creditors, even those who didn’t manage to participate in the proceedings last time.

Currently, walletsassociated with Mt Gox still hold 137,890 BTC, worth nearly $880 million, along with these airdropped tokens. As Bloomberg reporter Yuji Nakamura puts its, a distribution of these funds could trigger a major sell-off next year.

CryptoGlobe had previously covered that the trustee’s last crypto sell-off, of over 35,00 BTC and 34,000 BCH, didn’t influence the market, according to him. At the time, he said the cryptocurrencies weren’t sold through an exchange, but “in a manner that would avoid affecting the market price, while ensuring the security of the transaction to the extent possible.”

Fundstrat’s Tom Lee Explains How It’s Been ‘Confirmed’ That Crypto Winter Is Over

Siamak Masnavi

On Sunday (May 19), Thomas Lee, Co-Founder, Managing Partner and the Head of Research at independent research boutique Fundstrat Global Advisors explained why his firm believes that certain events that have occurred over the past six months "confirm" that crypto winter is over.

This is the tweet that Lee posted yesterday:

Although all of the 13 "signals" that are mentioned in Lee's tweet are interesting, in this article we are going to focus on those that we have seen during the past month or so (i.e. since mid April 2019), which means items 7–13 in Lee's list.

Adamant Capital's "Bitcoin in Heavy Accumulation" Report

This report was written by Tuur Demeester and Michiel Lescrauwaet, co-founders of Adamant Capital, and published on April 18. 

Here are some of main conclusions:

  • Bitcoin is in the last stage of the bear market, i.e. the "accumulation phase." More specifically, their analysis of the Bitcoin blockchain shows that "Bitcoin HODLers are committing for the long term again."
  • Bitcoin's fundamentals are improving as it gets embraced by both millennials, who tend to like disruptive technologies, and institutional investors, many of whom see Bitcoin as "an uncorrelated, highly liquid financial asset."
  • Bitcoin has the most "favorable" long term risk-reward ratio of "any liquid investment in the world."
  • We are going to "mass market adoption" of Bitcoin during the next five years.

Multiple OTC Brokers Reporting Surges in Trading Volumes

One example is Binance's OTC desk. On 17 April, Decrypt's Tim Copeland reported that, according to Binance CFO Wei Zhou, the "volume of over-the-counter Bitcoin trades" had "significantly risen" in April. The Binance CFO told Decrypt:

“Last month we saw a lot more volume than, say, three months ago. This was mainly due to the increase in price of Bitcoin and altcoins over the past few months. We’ve witnessed more trading activity—and demand."

Surge in On-Chain Activity

In a report published on May 6 (Volume 3, Issue 13), crypto research firm Diar had this to say about Bitcoin's on-chain activity:

"The number of transactions on-chain is also just shy of the all-time-high of December 2017. Since hitting a low in February of last year, month-on-month growth for the number of transactions has been clearly evident (see chart)."

Diar's 6 May 2019 Report - BTC - Onchain Activity Increase.png

As for Ether (ETH), this is what they said:

"776k Ether was transacted on DApps last month turning on-chain activity higher than the previous period for 4-months in a row. This year is the most prolonged period of growth in terms of transacted volumes DApps have witnessed, ever."

Willy Woo's Survey of Top Crypto Influencers, Analysts and Traders

Bitcoin's "Golden Cross"

As CryptoGlobe reported on April 23, this event, which had not been seen in around 3.5 years, was confirmed on that day.

Here is how Investopedia explains what a "golden cross" is and why it is significant:

"The golden cross is a candlestick pattern that is a bullish signal in which a relatively short-term moving average crosses above a long-term moving average. The golden cross is a bullish breakout pattern formed from a crossover involving a security's short-term moving average (such as the 15-day moving average) breaking above its long-term moving average (such as the 50-day moving average) or resistance level. As long-term indicators carry more weight, the golden cross indicates a bull market on the horizon and is reinforced by high trading volumes."

A "classic" golden cross is defined as one "when the 200 and 50 day moving averages cross, with the 50 crossing above the 200," and indeed this is what happened on April 23. 

Market's Calm Reaction to New York Attorney General's Court Order Agaist Bitfinex and Tether

As you probably know, on Thursday (April 25), New York Attorney General ("NYAG") Letitia James issued a press release to announce that her office had obtained a court order against iFinex (the operator of Bitfinex) and Tether Limited (the issuer of stablecoin Tether) "enjoining" the two firms "from further violations of New York law in connection with an ongoing activities that may have defrauded New York investors that trade in virtual or 'crypto' currency." 

Consensus 2019 Conference

The Consensus 2019 conference (May 13–15 in New York City) delivered several pieces of good news, two of which are listed below:

  • Crypto payment network Flexa announced that via a partnership with the Winklevoss Twins' digital asset exchange Gemini it was able to bring the "limited launch of its network and mobile app to enable instant cryptocurrency payments in stores and online for several retail merchants." These merchants include Amazon’s Whole Foods and Barnes & Noble. Flexa said that its new SPEDN mobile wallet app would allow merchants to "easily accept bitcoin, ether, Bitcoin Cash, and the Gemini dollar."
  • Kelly Loeffler, the CEO of Bakkt announced that Bakkt is working with its customers "over the next several weeks to prepare for user acceptance testing (UAT) for futures and custody" (expected to start in July).

Chart Courtesy of Diar Research