After a decade of waiting and a 10,000% surge in Bitcoin prices, creditors of the defunct Japanese BTC exchange Mt. Gox have finally received approval. Mt. Gox collapsed in 2014 due to a severe hacker attack and is now preparing to compensate its creditors, having lost over 850,000 BTC.
Mt. Gox is expected to distribute 127,000 BTC, equivalent to nearly $950 million, as compensation to the victims. Among the plaintiffs is Gregory Green of Illinois, who filed a class-action lawsuit against the exchange and its former CEO. At the time, Green’s frozen account held $25,000 worth of Bitcoin. With BTC’s value skyrocketing from around $600 then to over $60,000 now, Green’s investment loss amounted to about $250,000, with gains totaling $10 million. However, the exact amount he will receive from the anticipated payments starting in January remains uncertain.
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John Glover, Chief Investment Officer of a prominent crypto lending firm, noted that creditors are poised to receive an unprecedented windfall. He shared that many will likely withdraw funds, pleased to salvage their assets amid the exchange’s bankruptcy. Gox, it turns out, was their best investment ever.
The exchange is set to start disbursing funds to approximately 20,000 creditors next month. Payments will be in a combination of Bitcoin and Bitcoin Cash.
Luke Nolan, Ethereum analyst at digital asset management firm CoinShares, explained that due to tax implications, many creditors prefer compensation in similar assets. JPMorgan Chase pointed out that people opt for cryptocurrency payments either to avoid taxes or to not miss out on future price increases.
Glover emphasized strategies for managing capital gains tax, suggesting some creditors may hedge their positions to avoid hefty tax bills. They could use Bitcoin as collateral for loans rather than selling it, thus disposing of it without triggering tax obligations.
