The price of bitcoin recovered slightly today after the cryptocurrency experienced one of its biggest recent falls on Friday.

The price move came after the trustee for failed bitcoin exchange Mt. Gox started making repayments to the exchange’s creditors. On July 5, the rehabilitation trustee for Mt. Gox announced that it had made repayments in bitcoin and Bitcoin Cash to some of the failed exchange’s customers as part of a rehabilitation plan. The repayments are only being made when certain conditions are met, such as confirmation of registered accounts, an acceptance to agree to a settlement payment and other conditions.

The statement from the Mt. Gox trustees did not specify how much was being returned to previous exchange customers, but reports suggest that the figure was about 15% of the holdings investors held when the exchange went out of business in 2014.

Though numerous bitcoin and general cryptocurrency exchanges have collapsed over the last decade or so, Mt. Gox is still remembered as the granddaddy of crypto exchange fails. The exchange officially fell in February 2014 and at the time, it was claimed that the exchange had been hacked and bitcoin stolen.

As the Mt. Gox collapse story played out through 2014 and 2015, it was subsequently found that the allegedly “hacked” bitcoin had started disappearing from the exchange as early as late 2011 and that, by 2013, most of the bitcoin held by Mt. Gox had disappeared.

Emphasizing how dubious it all was at the time — and noting that Mt. Gox was, in its time, the world’s biggest bitcoin exchange — some of the bitcoin stolen from Mt. Gox was subsequently sold back to the exchange.

Mark Karpeles (pictured), chief executive of Mt. Gox, was arrested in 2015 by Japanese authorities. He was charged with embezzlement and manipulating the exchange’s computer system to inflate its balance.

Some of the bitcoin Karpeles allegedly stole was used to fund prostitutes. As reported back in 2015, Karpeles spent an “unspecified sum on prostitutes” that involved “several women whom he met at venues that offer sexual services.”

After initially denying the charges, Karpeles later confessed to Japanese police that he had created fake bitcoins. He was formally charged with embezzlement in September 2015, but the case was mostly dismissed, except for a minor charge related to record keeping, in 2019.

Fast-forward to 2024, and only now are the trustees for Mt. Gox distributing what they were able to recover from the exchange.

The main driver behind bitcoin’s price decline starting Friday was the amount of bitcoin hitting exchanges after the Mt. Gox disbursement. The trustee released 142,000 bitcoins, along with 143,000 in Bitcoin Cash and 69 billion Japanese yen ($432 million). Put more simply, a large amount of bitcoin that had been untouched for a decade started entering the market.

The only good news from the sordid tale is that though investors in Mt. Gox might only be getting back 15% of their previous bitcoin holdings, the value of those holdings is way more in 2024 than it was in 2014. One bitcoin in February 2014, just before Mt. Gox collapsed, was worth around $600. The same single bitcoin today is worth about $56,000.

Image: ANN News