The never ending saga known as Mt. Gox is one step closer to being a thing of the past. As many know, the world’s largest cryptocurrency exchange (at that time), was hacked in 2014. This exchange, known as Mt. Gox, suffered the loss of $473 million. It single-handedly set the market back years, and served as a warning tale to future exchanges (clearly a tale many have not heard). In the wake of the theft Mt. Gox handled the situation very poorly, and declared bankruptcy within 20 days. The result of this chain of events was a 36% decline in the cryptocurrency market.
Over 4 years later, the effects of this hack are still being felt. Nobuaki Kobayashi, who had been appointed the Mt. Gox trustee, has periodically been selling off large sums of BTC in short periods of time. After each sale there has been a corresponding dump in the market. Upon each sale, the proceeds have been going to those affected by the Mt. Gox hack.
The days of Kobayashi being able to single-handedly influence the market (whether directly or indirectly), may soon be over. It was announced earlier today that Mt. Gox will enter civil rehabilitation proceedings. This means that the bankruptcy proceeding have come to an end. Although the saga is not entirely over, it will now be handled differently.
A major noting point is that henceforth, Kobayashi will no longer be selling BTC, and reimbursing users with the proceeds. Instead Kobayashi will now reimburse users with BTC – avoiding the sale altogether. This is important to note because it should minimize market dumps post distribution. Whether or not the past distributions should have caused a dump is debatable. Regardless of the form of distribution, market sentiments will react to new, and buy/sell accordingly, creating a sell fulfilling prophecy.
No one entity should hold enough power to either directly, or indirectly influence the market to the extent that Kobayashi has. Hopefully 4 years in, this step forward is one of the last that needs to be taken. The announcement detailing the transition to civil rehabilitation can be found HERE.
Despite the notoriety of the Mt. Gox hack, its $473 theft only comes in as the second largest theft in the short history of cryptocurrencies. In February of 2018, the exchange known as CoinCheck lost $535 million worth of NEM. This particular hack occurred to poor security practices on the part of CoinCheck. It also expedited and fueled a forthcoming bear market for the entire industry. This bear market is still on-going to this day.
It is for reasons seen in the case of both Mt. Gox and Coincheck that many government are pushing for heavier regulation. As nice as it would be to simply let the technology and industry evolve on its own accord, there clearly need to be steps taken to protect those that can’t protect themselves.