One of Mt. Gox’s Bitcoin wallets reactivated
One of Mt. Gox’s Bitcoin wallets reactivated

One of Mt. Gox’s Bitcoin wallets reactivated

By Marco Cavicchioli - 6 Sep 2022

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A 5,000 Bitcoin transaction made a few days ago was reportedly traced to a wallet belonging to Mt. Gox. 

This was revealed by researcher ErgoBTC, who even goes so far as to associate that wallet with Jed McCaleb

The history of the famous Mt. Gox exchange

McCaleb founded Mt. Gox as far back as 2006, which was before the birth of Bitcoin. At that time the exchange obviously did not trade cryptocurrencies, but cards from the famous game “Magic: The Gathering Online.” 

In 2010 the ability to buy and sell Bitcoin was added, and in 2011 McCaleb sold the exchange to Mark Karpeles. In 2014 Mt. Gox went bankrupt, and Karpeles was subsequently imprisoned. 

McCaleb had no role in the failure of Mt. Gox, partly because in 2011 he was among the founders of Ripple, and later in 2014 he founded Stellar. 

Mt. Gox’s Bitcoin wallet that “woke up”

The Bitcoin wallet in question was created in December 2013, which is when Mt. Gox was still operating, but McCaleb was no longer part of it by then. 

Among the BTC stored in it are also some from the Kraken exchange, so it was assumed to be precisely a wallet connected to this exchange. However, according to ErgoBTC it is instead linked to Mt. Gox and Jed McCaleb. It is worth mentioning that in 2013 Mt. Gox was still the sole and absolute dominant exchange in the crypto markets, so it is more than plausible that McCaleb was still using it, since neither the Ripple project nor Stellar had their own major exchange. 

ErgoBTC cites a post from the Telegram channel GFiS in which they actually speculate that some Mt. Gox Bitcoin were recently moved. 

It is worth mentioning that a few days ago Mt. Gox’s bankruptcy trustee let it be known that they are about to begin the process of repaying creditors

It will presumably be a long process, and it will be divided into two phases. 

During the first phase, they will repay in fiat currency those creditors who have explicitly requested to be paid in fiat. However, since the now-bankrupt company does not have sufficient fiat currency in its cash, it will necessarily have to sell BTC and BCH to collect fiat currency with which to repay creditors during this first phase. 

Actually, it already sold some BTC some time ago. In fact, according to reports, after it closed its doors due to a colossal theft, some 200,000 BTC were found in an old cold wallet. However, the bankruptcy trustee recently stated that the company still owns about 140,000 BTC, so over the years, the remaining 60,000 BTC must have been sold on the market. 

The liquidation of part of the Bitcoin from Mt. Gox

It is possible that this divestment dates back to late 2017, or early 2018, when the previous post-halving speculative bubble burst. 

At that time, in fact, the curator realized that the market value of Mt. Gox’s still available BTC could have covered the full amount of creditors’ claims, i.e., the fiat value of customer cryptocurrencies held by the exchange at the time of its closure. 

It certainly seems that he decided to take advantage of this by selling off a portion of the BTC so that he could forfeit funds to be able to pay back the creditors in fiat. 

He sold just under a third of them, but it is not known at what price. If, for example, the average selling price had been about $10,000, the figure touched at the end of the bubble burst in February 2018, he would have collected about $600 million, or much less than the creditors were asking for in total. 

Although it is not known how many of these have asked to be repaid in fiat, it is safe to assume that $600 million may not be enough, and even if it were something more it would probably still not be enough. 

For this reason, there are those who speculate that the receiver will be forced to liquidate more BTC in order to forfeit sufficient funds in fiat to repay creditors during the first phase. The remaining BTC and BCH will be distributed to the remaining creditors in a second phase in proportion to their claims.  

The 2011 hacker attack on the exchange

GFiS points out that in recent days some rather unusual transactions of 5,000 BTC each occurred on a 2013 wallet. One of the chat users associated that wallet with the cyber attack on Mt. Gox in the summer of 2011.

In fact, before going bankrupt in 2014, the exchange had suffered another attack in 2011. The wallet is from 2013, but going back on the blockchain it appears that Bitcoin deposited in it in 2013 had something to do with the 2011 attack. 

This would involve wallet 1McU8D7g, which received 134,000 BTC from Mt. Gox right around the time of the 2011 attack.

GFiS speculates that the recent transactions have something to do with law enforcement’s investigation of that attack.

So while that wallet appears to be connected in some way to Mt. Gox, it does not appear to be connected to the process of repaying its creditors. 

bitcoin wallet jed mccaleb
The bitcoin wallet could be linked to Jed McCaleb

Why would the resurfaced Bitcoin wallet be connected in any way to Jed McCaleb?

Theoretically, it would be connected to an earlier affair involving the exchange several years before its bankruptcy, at a time when Jed McCaleb had recently sold the exchange to Karpeles. 

However, at this point, it is unclear why ErgoBTC associates this wallet with McCaleb. 

Unless he speculates that the former founder, who has since moved on to Ripple, was behind that 2011 attack. This hypothesis actually seems a bit of a long shot, so much so that it might be best to ignore it. 

In reality, the hypothesis of GFiS is not to be considered confirmed either, but if nothing else there are clear public clues that support it

If this hypothesis were true, the recent movements of the wallet in question may have nothing to do with the repayment of Mt. Gox creditors, although in theory there could be a connection. 

If in fact, as GFiS suspects, these were movements made by law enforcement, and not by the hackers who had stolen BTC from Mt. Gox in 2011, it would be possible to imagine that this could also be another attempt to recover funds taken from Mt. Gox

We are talking about 5,000 BTC out of a total of 140,000 still in the possession of the bankruptcy trustee, a significant amount, but not likely to make a difference. 

However, it cannot be ruled out that law enforcement is also finding other funds related to that 2011 theft. In fact, 25,000 BTC were stolen at that time, a figure that could also have some impact on the creditor repayment process if it were recovered in full. In total, they would be worth about $500 million at current market values, which is a similar amount to what can be assumed to have been collected between 2017 and 2018 from the sale of the missing 60,000 BTC. 

However, there is still no record of any possible recent movement of the BTC still in the possession of the bankruptcy trustee, partly because the trustee needs explicit permission from the judge to move them. While there is no way of knowing the judge’s decisions unless the receiver decides to make them public, at this time it is safe to assume that he has not yet begun moving them. 

Given that during the first phase of redemptions he will be forced to sell some of them in the market, perhaps somewhat hastily, it is possible that when he does begin to do so the market price may be somewhat affected, even if these transactions are made via OTC

Marco Cavicchioli

Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded and the Facebook group" Bitcoin Italia (open and without scam) ".

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