David Canellis

Mt. Gox trustees have sent out billions of dollars in bitcoin over the past three weeks, and prices are doing just fine.



Affected users are being credited their long-lost bitcoin to their exchange accounts, 10 years after the platform initially went bust.&nbsp;



So, trustees must send bitcoin to those platforms in batches, the first of which was coincidentally sent right at the pico bottom for bitcoin prices: $54,000.&nbsp;



Almost 54,910 BTC ($3.69 billion) has been forwarded to crypto exchanges on behalf of creditors since July 5.&nbsp;



Read more: <a href="https://blockworks.co/news/mt-gox-customers-crypto-asset-repayments">Mt. Gox customers to receive crypto assets after 10-year wait</a>



The latest batch of repayments was made in the very early hours Wednesday ET, when 2,361 BTC ($158.25 million) was sent to Bitstamp.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/18871976/embed#?secret=JvuYct7Pru" data-secret="JvuYct7Pru" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">The bigger and darker the bubbles, the bigger the transfer to participating crypto exchanges</figcaption></figure>



Markets had anticipated the first <a href="https://blockworks.co/tag/mt-gox">Mt. Gox</a> repayments for weeks, but exactly when they would begin was unknown.



The initial transfer of 1,544.7 BTC to Japanese platform Bitbank was worth $84.9 million at the time. Bitcoin has however since recovered by 22%, so the same sum would fetch $103.85 million right now.



There was initially 141,490 BTC ($9.5 billion at current prices) to distribute to creditors, and now there’s 86,580.2 BTC ($5.37 billion) remaining in Mt. Gox’s wallets, per Arkham Intelligence data. An additional amount in bitcoin cash is also to be distributed, although it would be worth much less in terms of dollar value.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/18671813/embed#?secret=Sy6yJ4rMFp" data-secret="Sy6yJ4rMFp" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">The government of German state Saxony has already dumped all of its bitcoin, which was a far smaller stash than Mt. Gox</figcaption></figure>



That means the repayment process is now 39% complete. Last week, it was <a href="https://blockworks.co/news/mt-gox-bitcoin-repayments-status">36% of the way through</a>.



Payments are expected to wind up completely within the next two and a half months, but it could be that transfers to crypto exchanges accelerate from here on out.



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Gox Watch: Repayments now 39% complete with $5.4B left to go

Donovan Choy

Repayments to the customers of Mt. Gox are set to begin after a decade-long court process.&nbsp;



Tokyo-based Mt. Gox once processed more than 70% of all BTC transactions at its peak before collapsing in 2014 after the loss of 950,000 BTC. Bitcoin was worth just $600 at the time.



About 20,658 customers will receive a portion of their lost assets this month, estimated at over $9 billion worth of BTC, BCH and ETH today.



The repayment process is planned to begin with BTC and BCH repayments first, <a href="https://www.mtgox.com/img/pdf/20240624_announcement_en.pdf">according</a> to Mt. Gox’s rehabilitation trustee. 



Kraken CEO David Ripley announced the successful redistribution of Mt. Gox BTC and BCH to creditors yesterday. A sum of <a href="https://platform.arkhamintelligence.com/explorer/tx/ef538385618f0fce71b2939be30d683902dc7df4bff6dcb978001348ff17bb35">48,641</a> BTC was sent to an address suspected to be a Kraken wallet on July 16.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">1/ <a href="https://twitter.com/krakenfx?ref_src=twsrc%5Etfw">@krakenfx</a> has successfully distributed <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> and Bitcoin Cash from the <a href="https://twitter.com/MtGox?ref_src=twsrc%5Etfw">@mtgox</a> estate back to creditors. It’s been nearly a decade since Kraken was selected by the Trustee to facilitate the investigation and return of client funds. It was our privilege and it was our duty. <a href="https://t.co/ptKexzN4gm">pic.twitter.com/ptKexzN4gm</a>&mdash; Dave Ripley (@DavidLRipley) <a href="https://twitter.com/DavidLRipley/status/1815880303254323603?ref_src=twsrc%5Etfw">July 23, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Bitstamp has publicly <a href="https://blog.bitstamp.net/post/bitstamp-to-restore-crypto-assets-to-mt-gox-creditors/">confirmed</a> receiving funds and began redistributing <a href="https://blockworks.co/tag/mt-gox">Mt. Gox</a> assets back to non-UK creditors.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">We&#39;re pleased to announce that we&#39;ve received the Mt. Gox assets. We&#39;re working diligently to distribute them to our Bitstamp customers who are Mt. Gox creditors. Please allow up to one week for security checks. We&#39;ll inform you when the transfer is finalized. Thank you for your…&mdash; Bitstamp (@Bitstamp) <a href="https://twitter.com/Bitstamp/status/1816133303549800768?ref_src=twsrc%5Etfw">July 24, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Arkham Intelligence data first <a href="https://platform.arkhamintelligence.com/explorer/entity/mt-gox">showed</a> that the European-based exchange received on Monday 1,980 BTC and 382,377 BTC in two separate transactions, followed by another 1,979 BTC and 382 BTC yesterday.



Despite long-standing fears <a href="https://blockworks.co/news/bitcoin-carving-out-low-german-government">of a supply overhang</a>, prices of both assets are holding steady on the news. BTC is up 0.3% to $66,064, while BCH has seen a slight decline of 0.3% to $366.



Based on Arkham’s data, Mt. Gox still <a href="https://platform.arkhamintelligence.com/explorer/entity/mt-gox">holds</a> about 90,344 BTC ($5.77 billion), about 64% of the original 140,000 BTC recovered by law enforcement.



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Mt. Gox customers to receive crypto assets after 10-year wait

Mt. Gox has for years made for a great bogeyman. Now, crypto is about one-third of the way to slaying it once and for all.



The final phase of the Mt. Gox repayment plan is about 36% complete — 10 years after it filed for bankruptcy. Kraken confirmed to Blockworks that repayments to its customers would be credited to relevant user accounts over two weeks.&nbsp;



As of Friday morning, there are only two transfers in the trustee’s blockchain history that are part of repayments, per Arkham Intelligence data:&nbsp;



<ul>
<li>1,545 BTC to Japanese exchange Bitbank on July 5, worth $84.9 million then and $98.9 million now.</li>



<li>48,641 BTC to an address believed to be Kraken’s on Tuesday (July 16) — $3.07 billion then, $3.11 billion now.</li>
</ul>



Bitcoin fell a few percent after the transfer to Bitbank but has since recovered, and then some. BTC is currently up 15% from those lows, jumping from under $55,900 to over $64,000.



There’s 90,344 BTC ($5.77 billion) still sitting in Mt. Gox’s bitcoin wallets, waiting to be sent out over the next couple of months (there’s additional bitcoin cash to be repaid, resulting from the 2018 hard fork, but it’s currently unknown from which addresses).&nbsp;



Read more: <a href="https://blockworks.co/news/mt-gox-bitcoin-final-boss">Bitcoin bulls meet their third final boss after US and Germany: Mt. Gox</a>



<a href="https://blockworks.co/tag/mt-gox">Mt. Gox</a> trustee Nobuaki Kobayashi in a recent <a href="https://www.mtgox.com/img/pdf/20240716_c63b18e5-6a79-4f24-9c1c-3dbd74dc6f78_announcement_en.pdf">letter</a> wrote that the transactions to Bitbank and Kraken meant over 13,000 creditors had been repaid to date. There were 20,658 individual creditors with claims to bitcoin in total, so Mt. Gox is 65% of the way through repayments, going by straight headcount.



The median Mt. Gox claim was previously <a href="https://www.blockchainresearchlab.org/wp-content/uploads/2020/05/BRL-Research-Note-1-MtGox.pdf">calculated</a> at a little over four BTC, which at $500 per coin would’ve been only $2,000 when the exchange went bust. Now, it’s over $250,000.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/18793709/embed#?secret=AouzoNMdjI" data-secret="AouzoNMdjI" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Bitcoin cash, in purple, has been hit far harder than bitcoin, in blue — losing more than 20% over the past three months</figcaption></figure>



We’ll sadly never know for sure exactly how many Mt. Gox creditors dump their bitcoin shortly after receiving it. Creditors are being paid directly to their crypto exchange accounts. That means the bitcoin will first go to a hot wallet, which jumbles it all together with the rest of user funds — practically impossible to track beyond that.&nbsp;



Still, Mt. Gox repayments will be one button away from trading it for some other cryptocurrency, or, even boomer fiat. Tempting. The government of German state Saxony otherwise sold <a href="https://www.justiz.sachsen.de/gensta/pressemitteilungen-2024-4537.html?_cp=%7B%22accordion-content-4539%22%3A%7B%220%22%3Atrue%7D%2C%22previousOpen%22%3A%7B%22group%22%3A%22accordion-content-4539%22%2C%22idx%22%3A0%7D%7D">most</a> of its $2.8 billion bitcoin stash over-the-counter, rather than directly on exchanges, <a href="https://blockworks.co/news/bitcoin-carving-out-low-german-government">to avoid price impact</a>.



Creditor claims skew heavily toward the top, with the bottom half only set to receive 1.3% of the total, per a 2022 report from Blockchain Research Lab. The top 1% of creditors meanwhile have claim to more than half of it, and 23 alone had more than a quarter.



Blockstream co-founders Gregory Maxwell and Adam Back are <a href="https://www.forbes.com/sites/digital-assets/2024/06/24/mtgox-9-billion-payout-is-creditors-gain-but-bitcoins-pain/">reportedly</a> those among Mt. Gox creditors, as well as Roger Ver. There’s also Fortress Investment Group, to which some Mt. Gox creditors had sold their claims for an earlier payout in cash.



The real question is whether the worst of Mt. Gox’s market impact is still left to come.&nbsp;



Going by Kobayashi’s numbers, the remaining 35% of creditors will receive 64% of the remaining bitcoin, worth close to $6 billion. The bigger fish are next on the repayment list.



A twist on an old adage goes: The bigger the fish, the harder the hands. Let’s see if that rings true.



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Gox Watch: $3B in bitcoin repayments down, $5.8B left to go

Katherine Ross

Today, enjoy the Empire newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox.&nbsp;<a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<h2 class="wp-block-heading">Gox Watch</h2>



Mt. Gox has for years made for a great bogeyman.&nbsp;



The whole saga poses a question: What would you do with a small fortune in long-lost bitcoin, almost all of it pure profit?



The median Mt. Gox claim was previously <a href="https://www.blockchainresearchlab.org/wp-content/uploads/2020/05/BRL-Research-Note-1-MtGox.pdf">calculated</a> at a little over four BTC, which at $500 per coin would’ve been only $2,000 when the exchange went bust. Now, it’s over $250,000.



We’ll sadly never know for sure exactly how many Mt. Gox creditors dump their bitcoin shortly after receiving it. Creditors are being paid directly to their crypto exchange accounts. That means the bitcoin will first go to a hot wallet, which jumbles it all together with the rest of user funds — practically impossible to track beyond that. 



Still, <a href="https://blockworks.co/tag/mt-gox">Mt. Gox</a> repayments will be one button away from trading it for some other cryptocurrency, or, even boomer fiat. Tempting. The government of German state Saxony otherwise sold <a href="https://www.justiz.sachsen.de/gensta/pressemitteilungen-2024-4537.html?_cp=%7B%22accordion-content-4539%22%3A%7B%220%22%3Atrue%7D%2C%22previousOpen%22%3A%7B%22group%22%3A%22accordion-content-4539%22%2C%22idx%22%3A0%7D%7D">most</a> of its $2.8 billion bitcoin stash over-the-counter, rather than directly on exchanges, to avoid price impact.



All we really have is the market reaction, which hasn’t been too bad. As of this morning, there are only two transfers in the trustee’s blockchain history that are part of repayments, per Arkham Intelligence data:&nbsp;



<ul>
<li>1,545 BTC to Japanese exchange Bitbank on July 5, worth $84.9 million then and $98.9 million now.</li>



<li>48,641 BTC to an address believed to be Kraken’s on Tuesday (July 16) — $3.07 billion then, $3.11 billion now.</li>
</ul>



Bitcoin fell a few percent after the transfer to Bitbank but has since recovered and then some, now up 15% from those lows, jumping from below $55,900 to over $64,000.



There’s now 90,344 BTC ($5.77 billion) sitting in Mt. Gox’s bitcoin wallets, waiting to be sent out (there’s additional bitcoin cash to be repaid, resulting from the 2018 hard fork, but it’s currently unknown from which addresses).&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXfAkeTBjws66bzi5mIKJ5qXntmtGJWoyc9sKM45rVYBxaI0I10BZAXUE4JnSAEp_W2QcPocf_d5DtNI-7MeH-Pw5-ExKXhZJDD_Zf-7InpT-yMjkMWSxR7gJrJ0n5DND4AGYHPMK5JR9H6QygD28nhte8IP?key=oJ301kSz07wK0IBPSTSW4A" alt=""/><figcaption class="wp-element-caption">Bitcoin cash, in purple, has been hit far harder than bitcoin, in blue — losing more than 20% over the past three months amid repayments</figcaption></figure>



All told, the final phase of the Mt. Gox repayment plan is about 36% complete — 10 years after it filed for bankruptcy. Kraken confirmed to Blockworks that repayments would be credited to relevant user accounts over two weeks. 



Mt. Gox trustee Nobuaki Kobayashi in a recent <a href="https://www.mtgox.com/img/pdf/20240716_c63b18e5-6a79-4f24-9c1c-3dbd74dc6f78_announcement_en.pdf">letter</a> wrote that the transactions to Bitbank and Kraken meant over 13,000 creditors had been repaid to date. There were 20,658 individual creditors with claims to bitcoin in total, so Mt. Gox is 65% of the way through repayments, going by straight headcount.



But creditor claims skew heavily toward the top, with the bottom half only set to receive 1.3% of the total, per a 2022 report from Blockchain Research Lab. The top 1% of creditors meanwhile have claim to more than half of it, and 23 alone had more than a quarter.



Blockstream cofounders Gregory Maxwell and Adam Back are <a href="https://www.forbes.com/sites/digital-assets/2024/06/24/mtgox-9-billion-payout-is-creditors-gain-but-bitcoins-pain/">reportedly</a> among Mt. Gox creditors, as well as Roger Ver. There’s also Fortress Investment Group, to which some Mt. Gox creditors had sold their claims for an earlier payout in cash.



The real question is whether the worst of Mt. Gox’s market impact is still left to come.&nbsp;



Going by Kobayashi’s numbers, the remaining 35% of creditors will receive 64% of the remaining bitcoin, worth close to $6 billion. The bigger fish are next on the repayment list.



How does that saying go? The bigger the fish, the harder the hands?



— David Canellis



<h2 class="wp-block-heading">Data Center</h2>



<ul>
<li>Global stablecoin <a href="https://defillama.com/stablecoins">supplies</a> grew $860 million in the past week to nearly $163.33 billion on Thursday — the highest point since TerraUSD collapsed in May 2022.</li>



<li>Weekly NFT <a href="https://dune.com/hildobby/ethereum-nfts">volumes</a> have hit their lowest point in at least two years: $32.3 million, down from $39.4 million in the prior period.</li>



<li>There has been only one Ethereum validator slashing <a href="https://beaconcha.in/validators/slashings">event</a> so far in July. Last month saw six slashings. Not one was recorded in May.</li>



<li>BTC and ETH have slipped 1% each, to $64,000 and $3,400.</li>



<li>Only two top-100 cryptocurrencies are in the red over the past <a href="https://www.coingecko.com/">week</a>: TIA is down 7.3% and TRX has shed 1.2%.</li>
</ul>



<h2 class="wp-block-heading">Hodlin’ on</h2>



Is a downside from Mt. Gox just around the corner? Well, it depends on who you talk to. But things might not be looking too shabby.



According to a cheeky post from CryptoQuant CEO Ki Young Ju, the sell-side liquidity is a little “scary.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Scary size of <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> sell-side liquidity from MtGox <a href="https://t.co/DHVjHr6XIO">pic.twitter.com/DHVjHr6XIO</a>&mdash; Ki Young Ju (@ki_young_ju) <a href="https://twitter.com/ki_young_ju/status/1813293736132321349?ref_src=twsrc%5Etfw">July 16, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



I know, I know, I’m doing another segment on bitcoin. But hear me out, this one’s all about that data.&nbsp;



Bitcoin, which had been trending lower prior to the assassination attempt on former President Donald Trump’s life last weekend, seems to have given up some of the recovery it made.&nbsp;



We’re still up over 10% on the week, mind you, but the chart shows a bit of the momentum tapering off.&nbsp;



“The price of Bitcoin may have already found a local bottom last week as large sellers realized losses and went out of selling power. Prices may have seen the bottom after heavy selling from the German government (50,000 Bitcoin) and news of the start of repayment for Mt. Gox creditors (95,000 Bitcoin transferred to exchanges). Additionally, sellers realized at least $2.5 billion in losses, which is also a signal of selling exhaustion,” CryptoQuant <a href="https://cryptoquant.com/insights/research/6697f25d0a078b098fed000d-17-July-2024-Local-Bottom-Large-Sellers-Exhausted-Valuations-Suggest-Positive-Mo">wrote</a> in a report earlier this week.&nbsp;



Looking at some other data sets, it does look like the lead up to the Mt. Gox distributions could have had more of an impact than the distributions themselves.&nbsp;



Which is in line with what Alex Thorn, Galaxy’s head of research, told us.&nbsp;



He continues to believe that the Mt. Gox “claims holders, on balance, are more likely to hold than sell. I also think the market has already priced in a decent amount of fear already regarding these repayments. That being said, with ~47,000 BTC having been transferred to Kraken, when the actual distributions happen to end-creditors (in 1-2 weeks), there could be volatility then.”



Back in June, for example, open interest on derivatives exchanges saw a 9.6% decline to $47 billion after liquidations were triggered by a drop in crypto prices that continued from June into July.&nbsp;



Add in concerns around Mt. Gox and, according to CCData, you have an “exacerbated” decline that was led by sleeping pressure fears from the bankrupt exchange. Of course, we also have to acknowledge that the selling from the German government earlier this month certainly didn’t help things either.&nbsp;



But the data shows some upside. We’ve talked extensively about the bullish fall, but there’s data that suggests a reason for some traders to be more bullish right now.&nbsp;



CryptoQuant community manager Maartunn <a href="https://cryptoquant.com/insights/quicktake/66984934b31f1e652088cafa-Bitcoin-is-back-above-the-average-cost-basis-of-short-term-holders?utm_source=twitter&amp;utm_medium=sns&amp;utm_campaign=quicktake&amp;utm_content=maartunn">published</a> a chart on the bitcoin short-term holder realized price — the average price at which bitcoin was last transacted onchain — which could show a potential support level in bitcoin’s future. Bitcoin, he noted, recently reclaimed its overall realized price.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXchjqq315aqjvJKQZuUNu4kl1L87ZQGh_UxXv8FMzh1dejyCTVA7BA7bx8ue_6ikOowiTgijvf6XKZ5EtoBzCwjnbGc2LY2ZMvvbMBf9ZG2wmU5QMdzE8GI8kp_YJ2TqI_11T8Jz3F2374dJ77xzU3QXqw?key=oJ301kSz07wK0IBPSTSW4A" alt=""/><figcaption class="wp-element-caption">Source: CryptoQuant</figcaption></figure>



“This is a positive sign because short-term holders often add to their positions when Bitcoin returns to their average cost basis, creating a support level. Since 2023, Bitcoin has reclaimed the short-term holder Realized Price twice, each time resulting in at least 30% profits,” the analyst said.



So far, so good. If Mt. Gox ends up not impacting price action too much, then things look really good for all of those catalysts that we’ve spoken about.&nbsp;



Thorn told me that it’s “one of the last major overhangs for bitcoin supply, though others still exist. The US government still possesses at least $10 [billion] of BTC.”&nbsp;&nbsp;



Either way, the <a href="https://x.com/milesdeutscher/status/1813282749383647574">bulls</a> are still out there and crypto may very well be a “coiled spring” as our own Mike Ippolito <a href="https://x.com/MikeIppolito_/status/1811404655634608636">said</a> earlier this month.&nbsp;



— Katherine Ross



<h2 class="wp-block-heading">The Works</h2>



<ul>
<li>A roundtable seat at a private fundraising event in Nashville next week with former President Donald Trump will cost a cool $884,000, per <a href="https://www.bloomberg.com/news/articles/2024-07-18/trump-asks-844-600-for-fundraiser-seat-at-bitcoin-conference">Bloomberg</a>.</li>



<li>WazirX called the $235 million hack an event ‘beyond our control,’ <a href="https://blockworks.co/news/wazirx-says-hack-beyond-our-control">according</a> to Blockworks’ Macauley Peterson.</li>



<li>Barstool Sports founder Dave Portnoy was paid mostly in bitcoin for his sponsorship deal with Kraken, CoinDesk <a href="https://www.coindesk.com/business/2024/07/18/crypto-exchange-kraken-paid-dave-portnoy-bitcoin-in-sponsorship-deal/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">reported</a>.&nbsp;</li>



<li>OKX is ending services in Nigeria by the end of August, per <a href="https://www.theblock.co/post/306003/okx-withdraws-from-nigeria">The Block</a>.</li>



<li>Kraken’s <a href="https://www.bloomberg.com/news/articles/2024-07-18/kraken-expands-crypto-institutional-services-to-uk-australia">expanding</a> its institutional business unit’s crypto custody services to Australia and the UK.</li>
</ul>



<h2 class="wp-block-heading">The Riff</h2>



Q: Is Polymarket this cycle’s breakthrough mainstream app?



Not only that, but a canary in the coalmine.



Prediction markets are one of blockchain’s oldest use-cases — letting anyone put their money where their mouth is about any topic.



The concept translates really well with mainstream audiences. Since long before blockchain, bookies have offered odds on all different types of silly stuff, from the weather to meteor strikes and celebrity divorces.&nbsp;



Adding crypto to the equation is only natural. And, at least for now, the general public has gotten past the whole “prediction markets can quickly become assassination markets” <a href="https://www.independent.co.uk/tech/donald-trump-assassination-market-blockchain-augur-a8464516.html">conundrum</a> that had plagued previous iterations from time to time.



But as our lives, both physical and virtual, become hyper-financialized, it’s increasingly likely that prediction markets will seep into baseline reality.



Anything that needs doing, from homework, to artwork, to investigations, can, hypothetically, be crowdsourced through prediction markets. Just nothing illegal. Still not a good idea.



— David Canellis



It’s funny because Polymarket’s come up in a few chats I’ve had this week, with people remarking on how successful it’s become.&nbsp;



Then you add in the <a href="https://www.axios.com/2024/07/16/nate-silver-polymarket">news</a> that they’ve brought Nate Silver on as an adviser, and it’s hard not to be impressed. Honestly, I’ve even made Polymarket a saved tab that automatically opens when I launch my web browser so that I can check on the latest odds.&nbsp;



I can imagine it becoming more and more important in the next few months. And I don’t think its popularity goes poof once the ballots are in. It’s a good glimpse into the narratives at play, and a way to gauge the popularity of narratives overall.&nbsp;



For example, Twitter and Reddit used to be some of the best ways to figure out how folks were feeling about certain things in crypto, but now — in most cases — there’s probably a market on Polymarket.&nbsp;



And that type of use case, when it’s accessible to the masses, is one of the best ways to expand past just crypto.



— Katherine Ross



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Empire Newsletter: Mt. Gox repayments hang over the crypto market

The German government’s been quite busy raking in some cold hard cash as it seeks to offload portions of its bitcoin stash.&nbsp;



While analysts have been warning about the potential impact of the Mt Gox repayments, the German government’s moves came as a bit of a surprise to some.



However, the selling from the German government isn’t enough, at this point, to put a stop to John Glover’s bullish attitude. The chief investment officer of Ledn thinks that bitcoin could top $80,000 — if not higher, with other analysts calling for $100,000 — by the end of the year.&nbsp;



That might not stop bitcoin from another slide lower, though. He reiterated that he’s watching the $55,000 to $56,000 level, as we previously reported. If it falls further, then keep an eye on $49,000.



Read more: <a href="https://blockworks.co/news/mt-gox-bitcoin-final-boss">Bitcoin bulls meet their third final boss after US and Germany: Mt. Gox</a>



“And you know, it is a significant amount of bitcoin that&#8217;s hitting the marketplace. You know, 140,000 or whatever that number, is going to be a lot. But as we talked about before, who knows how much of that is actually going to get sold?” Glover said. Even prior to <a href="https://blockworks.co/tag/mt-gox">Mt Gox</a>, the price action “couldn’t break and make new highs.”



“We went up to that $73,000, we dipped off to the mid-60s. We tested $72,000, then dipped off mid-60s, tested one more time, and then came up. Anyone who was long from that March rally from $35,000 up to $73,000…I can see when there are three failed attempts to make new highs, they&#8217;re going to start thinking about taking profit,” he added. So long as they don’t have diamond hands, of course.



Keep in mind that we’re in the dog days of summer as well. For traditional markets, that generally means lower volume. Glover thinks that the entrance of so many institutional investors means that the trend is carrying over to crypto markets as well.



“The one thing that I found interesting in the last 24 hours of trading is that volumes didn&#8217;t jump up. I was kind of thinking that with the volatility we saw from $57,000 to $54,000 back up again, we would have seen some pretty decent increase in volumes. We didn&#8217;t see that. And that makes me slightly nervous because you tend to see a spike in volumes at bottoms and up tops. And we didn&#8217;t see a spike in volume, even though we went down and made a new kind of recent low. So that makes me a little bit nervous that maybe we haven&#8217;t seen the bottom yet. But again, it&#8217;s hard to say,” Glover said.&nbsp;



The German government’s selling, however, muddies his read a little bit. Though, he thinks that the move makes sense.



“I mean, that was a significant amount of bitcoin that they supposedly sold in the last 24 to 48 hours. Interesting to me that they&#8217;re doing it. But you know, when you look at every government being cash-strapped, it&#8217;s not really surprising,” he said.&nbsp;



In total, he estimates that $25 billion worth of bitcoin has been repossessed by governments, which is just another overhang to keep in mind because governments are going to seek to monetize those holdings.&nbsp;



Given that the market is trading roughly $30 to $40 billion a day in bitcoin alone, that kind of selling can be absorbed, he added. So far, the German government’s offloaded roughly $2 billion, <a href="https://blockworks.co/news/germany-bitcoin-stash-exchange-transfers">per Blockworks’ David Canellis</a>.



Looking at the chart over the past week, it’s clear that most of the selling is happening during the Asia/Europe hours — which makes sense given both Mt Gox and the German government — but there’s buying interest when the US starts to log on.



“That&#8217;s what we&#8217;ve seen the last couple of sell-offs. It&#8217;s been late European, early Asian sell-off, and then the US comes in and starts buying it back. So I think there&#8217;s the overhang from Mt Gox in Asia, and then there&#8217;s the desire for traditional finance players to add to their portfolios on dips. So that kind of makes sense [with] what&#8217;s happening here. It&#8217;s just who&#8217;s going to win this battle between the bears and the bulls is a little bit tough,” Glover said.



A shorter version of this article first appeared in Tuesday’s Empire Newsletter. Sign up <a href="https://blockworks.co/newsletter/empire">here</a> to never miss an issue.



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Has bitcoin carved out the low? 

Today, enjoy the Empire newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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<h2 class="wp-block-heading">Backup to Nakamoto Plaza!</h2>



In Die Hard, East German criminal mastermind Hans Gruber took over Nakatomi Plaza in a plot to steal over half a billion dollars in bearer bonds — worth $1.7 billion in today’s money.



Now, three and a half decades later, Germany is back, holding all of our attention hostage while it liquidates billions in bitcoin.



The bitcoin — nearly 50,000 BTC ($2.86 billion) — was seized earlier this year from the operator of Movie2k, the defunct piracy portal that shut down in 2013.&nbsp;



Earlier this morning, addresses linked to the Bundesregierung altogether transferred 6,306 BTC ($361.3 million) to Kraken’s exchange, market maker Cumberland DRW and two other entities that appear to be connected to over-the-counter trading desks or other similar platforms.



Meanwhile, on Monday, the same addresses directed an eye-watering 16,038 BTC ($920 million) to Kraken, Cumberland DRW, and other trading platforms including Bitstamp, Flow Traders and Coinbase.&nbsp;



Overall, Germany has sent over $2 billion in bitcoin to trading platforms since June 16, per Arkham Intelligence data, including unidentified addresses assumed to be OTC desks,



The simplest explanation for those transfers is that the government is selling the seized bitcoin, as the US government does from <a href="https://blockworks.co/news/us-government-dumps-bitcoin-silk-road">time to time</a>.&nbsp;



But Germany’s wallets have also received bitcoin back from the trading platforms, totaling $508.6 million, valued at each time of transfer.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXdDQoKoyg-hWMRO6NcQSbuS46KTp_25sFe1YrEUU7yF0R1RdfXC-Gm9WI8Vr5ivyK-5HFmtueoziMnqBTxRnSMFspV2cvSKfSJr_IwoeQRJqI94Hzf_tBnXjcxfUWQ1dFeegB4zNCv9zL-5yu4Kh1KJJkBn?key=41qEQCwGUDAIflaILZWd0g" alt=""/><figcaption class="wp-element-caption">Purple plus signs are exchange deposits, green diamonds are inflows back to Germany’s wallets</figcaption></figure>



Take yesterday: Of the $920 million in bitcoin sent to trading platforms, about 15% of it was directed to Bitstamp, equal to around $134 million.&nbsp;



Earlier this morning — two hours before Germany’s latest round of exchange transfers — government wallets received 1,692 BTC ($97 million) back from Bitstamp. Chunks of bitcoin have also been returned from Kraken, Coinbase and miscellaneous apparent OTC desks.



It’s unclear why Germany’s wallets follow these patterns, but perhaps most importantly, the outflows far outweigh the inflows to date.



If we surmise that any bitcoin that hasn’t made it back to German wallets has more than likely been sold for fiat, then Germany is so far more than halfway through liquidating Movie2k’s bitcoin.



A broad estimation suggests Germany may have generated up to $1.54 billion from 27,014 BTC, with an implied price of $56,800 per coin — 1% below its current trade price. US authorities sent a separate $241.2 million to Coinbase at the end of June.



Germany is still holding 22,846 BTC ($1.31 billion), which is definitely a lot of money. (For scale, CoinGecko reports about $32 billion in global daily bitcoin volume right now).



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXfx9tScwghiTn2mANqafF09NJ__h8bACjPJA7cf0HI9-g62GfChW3xN6MypFcjTvmX1CTWJ6ZM3p780QDdgWoAdUfH08sBkSDKmhPlzOlPseOb4j7eBpTiL7Fg1k-JIb_hetEBJhU1BGaWqWTlfpGdCeJ30?key=41qEQCwGUDAIflaILZWd0g" alt=""/><figcaption class="wp-element-caption">Mt. Gox and the US government still have a long way to go</figcaption></figure>



As with big spectacle liquidations like these, it’s difficult to say which has the bigger market impact: the actual sales or the chatter surrounding them.&nbsp;



The answer doesn’t really matter. The outcome is the same. What does matter is that Germany could turn out to be the least threatening bitcoin villain over the short term.



Mt. Gox still has over five times more bitcoin to distribute to creditors over the next few months, and directly to crypto exchanges, no less.&nbsp;



The US government, meanwhile, is sitting on even more seized bitcoin — over 50% more than Mt. Gox’s remaining stash — equal to $12.67 billion.&nbsp;



Yippee ki‐yay, bitcoin stacker.



— David Canellis



<h2 class="wp-block-heading">Data Center</h2>



<ul>
<li>The UK government also has its own seized bitcoin <a href="https://platform.arkhamintelligence.com/explorer/entity/uk">stash</a>: 61,245 BTC ($3.52 billion). It hasn’t yet transferred any of it.</li>



<li>BTC open interest is down <a href="https://www.coinglass.com/BitcoinOpenInterest">almost</a> 25% over the past month, now at $27.63 billion.</li>



<li>Weekly DEX volumes are up 45% to $44.4 billion, led by Solana’s Raydium with 13.5% of the total, per DeFiLlama.</li>



<li>Restaking protocol Karak’s <a href="https://defillama.com/protocol/karak-protocol?denomination=USD">TVL</a> is looking to reclaim the $1 billion mark, after falling under $800 million earlier this month. </li>



<li>Rival EigenLayer has shed over $5 billion <a href="https://defillama.com/protocol/eigenlayer">TVL</a> over the past month. ETH’s falling price is only partly to blame, with stakers overall pulling 6% of ETH locked in the protocol.</li>
</ul>



<h2 class="wp-block-heading">Must keep swimming</h2>



I’m losing at 2024 bingo, if we’re being honest.



So far this year, there have been a few things that I didn’t think to include in my expectations, such as crypto becoming an election topic (and part of the Republican <a href="https://cdn.nucleusfiles.com/be/beb1a388-1d88-4389-a67d-c1e2d7f8bedf/2024-gop-platform-july-7-final.pdf?utm_medium=email&amp;utm_source=ncl_amplify&amp;utm_campaign=240708-2024_gop_platform_make_america_great_again&amp;utm_content=ncl-4NsN8UE5x2&amp;_nlid=4NsN8UE5x2&amp;_nhids=wmn7SnnE">party platform</a>, ICYMI) and, well, the German government suddenly deciding to offload its bitcoin stash.



Let’s focus on the latter since we’ve seen a whole lot of transfers in the last couple of days, and some investors seem spooked.&nbsp;



I called up Ledn’s John Glover to check in on the two levels he gave us a few weeks ago ($55,000 to $56,000 and $49,000, respectively) in light of the German government&#8217;s lack of diamond hands.



“I mean, that was a significant amount of bitcoin that they supposedly sold in the last 24 to 48 hours. Interesting to me that they&#8217;re doing it. But you know, when you look at every government being cash-strapped, it&#8217;s not really surprising,” he said. 



In total, he estimates that $25 billion worth of bitcoin has been repossessed by authorities, which is just another overhang to keep in mind because governments will seek to monetize those holdings.&nbsp;



With roughly $2 billion dollars offloaded so far, Glover’s not too worried though. Given that the market is trading roughly $30 to $40 billion a day in bitcoin alone, that kind of selling can be absorbed, he added.&nbsp;



In fact, when you’re looking at the chart, you can kind of track where the selling pressure is coming from…. and when the dip’s being bought. For example, the pressure on Sunday night came during the Asia/Europe hours but had bounced back by the time the US was coming online.&nbsp;



“And that&#8217;s what we&#8217;ve seen the last couple sell-offs. It&#8217;s been a late European, early Asian sell-off, and then the US comes in and starts buying it back,” Glover said.



“So I think there&#8217;s the overhang from Mt. Gox in Asia, and then there&#8217;s the desire for traditional finance players to add to their portfolios on dips. That kind of makes sense for what&#8217;s happening here. It&#8217;s just [that figuring out] who&#8217;s going to win this battle between the bears and the bulls is a little bit tough.”



Let’s be clear though: The German government&#8217;s selling may be a negative catalyst right now, but that’s not impacting Glover’s longer-term thinking. He still thinks we hit $80,000, with the potential to go higher, by the end of the year.&nbsp;



I’m now hoping nothing too crazy happens to further throw off my bingo card.&nbsp;



— Katherine Ross



<h2 class="wp-block-heading">The Works</h2>



<ul>
<li>Cboe filed on behalf of the SOL ETF contenders — <a href="https://cdn.cboe.com/resources/regulation/rule_filings/pending/2024/SR-CboeBZX-2024-066.pdf">21Shares</a> and <a href="https://cdn.cboe.com/resources/regulation/rule_filings/pending/2024/SR-CboeBZX-2024-067.pdf">VanEck</a> — late Monday, adding that it hopes to address “increasing investor interest in Solana.” </li>



<li>DigitalX Limited received the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02826170-6A1215032?utm_medium=email&amp;_hsenc=p2ANqtz--7xJ-s12Q6_HrVX1hzX43VhoFCht663rOrfizw5pnTA_UHyB5Bi7QCnN7P_UPEoMCALMUo7iw3dys00x92WoKMr8zeYA&amp;_hsmi=314902829&amp;utm_content=314902829&amp;utm_source=hs_email">green light</a> from Australia to launch a spot bitcoin ETF.</li>



<li>While bitcoin remains dominant, Australian investors are increasingly interested in some memecoins, <a href="https://www.theblock.co/post/304152/aussie-investors-still-favor-bitcoin-while-newer-memecoins-gain-popularity-kraken">according</a> to Kraken.</li>



<li>Ex-Valkyrie CEO Leah Wald will be <a href="https://www.coindesk.com/business/2024/07/09/ex-valkyrie-ceo-leah-wald-to-take-reins-of-crypto-investment-firm-cypherpunk/">taking over</a> as CEO of investment company Cypherpunk. </li>



<li>Hut8 <a href="https://www.globenewswire.com/news-release/2024/07/09/2910169/0/en/Hut-8-Executes-Definitive-Agreements-for-Site-in-West-Texas-with-205-MW-of-Immediately-Available-Power-Capacity.html">announced</a> it entered into a power-purchase agreement for a West Texas site. </li>
</ul>



<h2 class="wp-block-heading">The Riff</h2>



Q: What can crypto be optimistic about right now?



The easy answer is the ETH ETFs (which could come very soon, according to our very own Ben Strack!)



But I’m actually going to say the election. Putting aside the politics of it all, there’s no doubt that a party acknowledging crypto shows how far it has come. And not only could we see bitcoin top new all-time highs, it validates the industry to boot.



Again, I can’t stress enough that I’m not endorsing or signing off on either political party. But I’d be remiss not to see the potential growth for the industry based on the combination of new ETFs and more attention on a national scale.&nbsp;



— Katherine Ross



That we may be finally ready to put the worst dramas in crypto history to bed, for good.



Mt. Gox repayments should be wrapped up over the next 90 days max. Think of those like a Band-Aid — the sooner the better. The same goes for Germany’s liquidations and whatever else the US wants to sell.



Not to discount the anguish still felt by victims of Terra, Three Arrows, Celsius and FTX.



Anyone financially, spiritually, mentally or emotionally hurt in the fallout surrounding any of those collapses (and the many others around the same time) will still have to deal with that day-to-day. And that sucks.



But if Solana can shed its connection to Sam Bankman-Fried and Alameda Research in the public zeitgeist — to the point that funds are filing for SOL ETFs — then we too can drop even our heaviest baggage.



— David Canellis



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Empire Newsletter: Germany may now be over half-way done selling bitcoin

Bitcoin dipped to its lowest point since February as Mt. Gox’s trustees transferred its first repayments to crypto exchange Bitbank early Friday morning.



Mt. Gox’s transfer of 1,545 BTC ($84.87 million at the time) came after prices had already sunk more than 10% over two days, slipping from $60,330 to $53,950.&nbsp;



The Mt. Gox move comes as the German government continues to direct hundreds of millions of dollars in bitcoin to multiple crypto exchanges.



Germany sent bitcoin as recently as this morning, only one hour after Mt. Gox’s transfer. BTC has since recovered slightly to $55,300 and no other Mt. Gox transfers had hit the chain at time of writing.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1326" height="994" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=1024&amp;h=1024" alt="" class="wp-image-88960" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=1326 1326w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=343 343w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=348 348w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=292 292w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/recentdumps3.png?w=80 80w" sizes="(max-width: 1326px) 100vw, 1326px" /><figcaption class="wp-element-caption">The bigger and redder the bubble, the more bitcoin was transferred. Any bubble without an arrow is from addresses tied to German authorities.</figcaption></figure>



After subtracting the 3,433 BTC ($190.7 million) that has been sent back to Germany’s wallets from crypto exchanges, the government’s tally over the past few weeks is now at 8,632.44 BTC ($482 million), according to Arkham Intelligence data, which tags and collates blockchain transaction histories.&nbsp;



Addresses tied to the US government otherwise transferred seized crypto totaling 3,940.28 BTC ($217.7 million now, $241.22 million then) to Coinbase late last month.



 Germany&#8217;s addresses still retain 41,226 BTC ($2.33 billion) while the US wallets have 213,297 BTC ($12.04 billion) along with over $400 million in other cryptocurrencies.



Read more: <a href="https://blockworks.co/news/us-german-governments-selling-bitcoin">US, German governments have sent $738M in bitcoin to exchanges over the last 2 weeks</a>



Mt. Gox was one of the earliest crypto exchanges, responsible for 70% of global volume at its peak across 2013 and 2014.&nbsp;



Almost 750,000 BTC belonging to its users, as well as an additional 100,000 BTC owned by the exchange, was <a href="https://web.archive.org/web/20140723220740/http://online.wsj.com/news/article_email/SB10001424052702303801304579410010379087576">stolen</a> over a number of years — the equivalent of 4.3% of the current circulating supply.



The losses were first disclosed in February 2014, which was shortly after one of bitcoin’s first major bull runs. BTC exploded from $15 in January 2013 to over $1,200 by that December.&nbsp;



Only one-sixth of the bitcoin lost by Mt. Gox was successfully retrieved, totaling 143,232 BTC ($7.85 billion) as of earlier this week. Mt. Gox’s transfer this morning represented just 1% of the bitcoin set for in-kind distributions.&nbsp;



Repayments <a href="https://www.mtgox.com/img/pdf/20240624_announcement_en.pdf">overall</a> are set to be wound up over the next 90 days but former CEO Mark Karpeles <a href="https://www.coindesk.com/business/2024/07/05/mt-gox-begins-repayments-in-bitcoin-and-bitcoin-cash/">reportedly</a> described that as the worst-case scenario.&nbsp;



The general worry is that Mt. Gox creditors, who’ve been waiting for a decade to receive their funds back, could opt to sell and drive prices down further, which would explain the recent bitcoin dip.



Alex Thorn, head of firmwide research at Galaxy Research, <a href="https://blockworks.co/news/mt-gox-distributions-bitcoin-market-impact">previously countered that notion</a>, suggesting that creditors may opt to continue holding given how long the wait has been.



In any case, bitcoin’s recent weekly drop of up to 12.6% is about par for the course for this bull market. The blue columns on the chart below show weekly losses on a daily rolling basis.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1897" height="1425" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=1024&amp;h=1024" alt="" class="wp-image-88961" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=1897 1897w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=342 342w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=347 347w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=292 292w, https://blockworks-co.imgix.net/wp-content/uploads/2024/07/Screenshot-2024-07-05-at-16.02.31.png?w=80 80w" sizes="(max-width: 1897px) 100vw, 1897px" /><figcaption class="wp-element-caption">Bull markets are shown by the green bands and the dotted lines are major timeline events</figcaption></figure>



While days on which bitcoin had gone down week-on-week became more frequent after the March peak, the size of BTC’s most recent drawdown matches what was seen even during its run from $20,000 to $60,000.



The real question is whether bitcoin will bounce. Although flows have dwindled, and <a href="https://blockworks.co/news/us-bitcoin-etf-seventh-day-outflows">even turned negative</a> at some points, spot bitcoin ETFs could run counter-narrative to the government-and-Gox melange of malaise, considering they’ve helped keep pace since their launch in January.&nbsp;



“Bitcoin ETF flows might see an uptick if market participants believe that economic uncertainty will drive the Fed towards eventual rate cuts, enhancing the appeal of bitcoin as an inflation hedge,” Jag Kooner, Head of Derivatives at Bitfinex, told Blockworks.



“However, significant inflows would depend on broader market sentiment and risk appetite. Currently… we’ve recently seen quite underwhelming flows and a lack of ‘dip-buying.’”



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Bitcoin bulls meet their third final boss after US and Germany: Mt. Gox

The markets are seeing red.&nbsp;



Mark Wong, HashKey OTC’s head of trading, chatted with Blockworks about the market, giving a little peek under the hood at the overall vibe.



“What’s interesting is that there’s been no significant technology of yet to build a catalyst. We do feel that sentiment has been basically revolving around most of the same players,” he told me.&nbsp;



The big catalyst earlier this year was clearly the bitcoin ETFs, which led bitcoin to hit a fresh all-time high following the previous bear market. But now, outflows could signal a “true correction” according to CoinShares, which noted that outflows from the US bitcoin ETFs topped $584 million last week.



“We see some dissociation between, for example, bitcoin prices [last] week against the backdrop of soaring stock prices if we look at the S&amp;P. So it does feel as though if there&#8217;s a downturn in the overall macro environment… For example, if the [Federal Reserve doesn’t] cut interest rates at the rate that the market wants them to, there may be more pain on the downside.”



There’s also the news early this morning that Mt Gox will start repayments next month, but Wong says this is all just “very cyclical.”



He told Blockworks he’s currently seeing some profit-taking from early bitcoin adopters, but he also sees buying interest from institutions such as family offices and asset managers. Outside of bitcoin, he’s seeing a trend of folks buying into thematic coins, including real-world assets and DePIN. 



“They’re just thematic sort of movements going on in the space, I think,” he said.



He’s also watching airdrops as they evolve and he’s curious to see how the “tokens increase their user pool going forward. I think that’s something that we’re also looking at as a firm overall.”



In the Empire newsletter, my co-author and Blockworks editor David Canellis has analyzed a lot of data around memecoins, especially celebrity memecoins. For Wong, this is another subsect of crypto to pay attention to.&nbsp;



“I think memecoins have resulted in quite a decent amount of dilution of value all around in terms, but there will be some that are there to stay,” Wong said.&nbsp;



He further noted that the ones that build a good community and also provide “significant entertainment value” are the ones that show the most promise for a long, lasting run.



But outside of the US ETFs and memecoins, Wong thinks we’re in the “eye of the storm” currently, and that this isn’t the start of a more volatile period. But is this a sign of the market maturing, and if that’s the case, can we start to expect less volatility? 



“All around, I believe that the volatility may not have begun yet,” he added. “We haven’t quite seen the 2021 levels of excitement.”



Given that it’s summer, he also pointed out that the classic Wall Street saying “sell in May and go away” may actually be applicable right now.&nbsp;



“I think bitcoin does show better performance within the fourth quarter, so the market may be looking forward to that,” he told me.&nbsp;



His view is in line with others, as <a href="https://blockworks.co/news/telegram-blockchain-surfing-narratives">we’ve previously discussed</a>. Despite the lower levels, I’m told there’s still a pathway to bitcoin near or at $100,000 by the end of the year.



While US bitcoin ETFs have dominated the headlines, Wong’s actually feeling pretty “positive” about the Hong Kong counterparts. HashKey, in partnership with Bosera, <a href="https://group.hashkey.com/en/newsroom/bosera-hashkey-bitcoin-and-ether-spot-etfs">launched</a> both an ether and bitcoin ETF at the end of April.&nbsp;



“There are a number of ETF flows that are related throughout arbitrage so there&#8217;s a trade ongoing that people buy for ETFs and sell sort of CME futures, where that volume may be a lot bigger than just pure buy volume. This is a hedge trade so within the Hong Kong side, we have, in total, [flows coming in around] $10 or $15 million US. We feel like it&#8217;s very positive, and everything that we are confident and continues to grow in the space,” Wong said. 



A shorter version of this article first appeared in Monday’s Empire Newsletter. Sign up <a href="https://blockworks.co/newsletter/empire">here</a> to never miss an issue.



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Bitcoin may be in a ‘sell in May and go away’ phase: Analyst

Movement of bitcoin from the known Mt Gox wallet to a new address earlier this week caused a bit of panic as investors wondered what was happening.&nbsp;



Former CEO Mark Karpelès assured people that the move was made to prepare for distributions. The estate then put out a <a href="https://www.mtgox.com/img/pdf/20240528_announcement_en.pdf">statement</a> echoing Karpelès. None of this is out of the norm, as the trustee has to prepare for the distributions which have a deadline of Oct. 21.&nbsp;



Obviously, the distributions have the potential to apply a lot of pressure on the market. It’s also a hotly discussed topic, with research firms like K33 saying that there’s the potential for downside as more creditors receive their distributions.&nbsp;



Now the thing with Mt Gox is that it’s a lot murkier — for a few reasons — than some of the US bankruptcies we’ve talked about.&nbsp;



Read more: <a href="https://blockworks.co/news/empire-newsletter-bitcoin-mt-gox-creditors">Empire Newsletter: Could bitcoin take a hit from Mt Gox creditors?</a>



It’s also the oldest crypto bankruptcy of the current bunch at 10 years old. The lack of clarity around the process comes from a few things: the overseas aspect, missing bitcoin, etc.&nbsp;



As mentioned above, K33 said earlier this year that the payout could apply pressure to bitcoin. The movement earlier this week just served as a reminder that the overhang is nearing, K33 analysts wrote on Tuesday.&nbsp;



Earlier this year, people on Reddit said that they began to receive emails from the estate asking them to confirm their account and identity details. The emails also added that distributions would be in-kind, lining up with the timeline established after <a href="https://blockworks.co/news/mt-gox-paypal-payment-creditors">some creditors were repaid</a> in yen late last year.&nbsp;



In-kind means that a creditor receives bitcoin or bitcoin cash, rather than fiat.&nbsp;



“Today, the market indicated that it expects Bitcoin cash to underperform once the Mt. Gox floodgates are opened, as shorts piled into BCH perps shortly after wallets reactivated.”



But it might not be all doom and gloom once the distributions are made, depending on who you talk to.&nbsp;



Galaxy Research’s Alex Thorn offered some clarity in a research note late Tuesday, noting that the creditors had options for their payouts and some could opt for earlier payouts that take a bit off the top to make it more timely. Those willing to be patient could opt to wait a bit longer and receive a larger payout at a later date.&nbsp;



Thorn also believes that roughly 65,000 BTC/BCH will be returned to 20,000 individual creditors from late May to June, or even as late as September.&nbsp;&nbsp;



Speaking to funds with large claims, Thorn said they’re “likely to distribute their BTC to LPs in-kind, and from speaking with several LPs in these funds, [he] does not believe there will be significant selling from this cohort.”



Overall, Thorn says the creditors he’s chatted with seem to be longer-term bitcoiners who wouldn’t be so willing to hit the sell button once the bitcoin is moved to their wallet.&nbsp;



“Although it’s impossible to quantify, we believe the creditor base is comprised primarily of die-hard bitcoiners. Thousands of these creditors have waited 10 years for payouts and resisted compelling and aggressive claims’ offers during that time, suggesting they want their coins back,” he wrote.



But, we’re talking about billions of dollars in bitcoin here. The payout is tremendous and even 6,500 of the 65,000 bitcoin being sold could have a market impact.&nbsp;



However, <a href="https://blockworks.co/tag/galaxy-digital">Galaxy</a>’s report Tuesday notes that the firm believes the market “is anticipating much larger sell pressure on BTC than is likely to occur.”



Both Thorn and research firms like K33 can agree, however, that the repayments are going to weigh on bitcoin cash.&nbsp;



“This massive payout is likely to impact the performance of both coins negatively,” K33 wrote Tuesday. “We argue that BCH is the single most exposed asset and an attractive pair hedge against Mt. Gox distributions.”



Thorn wrote that one of the big reasons BCH could face such an impact is due to the fact that creditors didn’t originally buy or own any BCH, given that it was created three years after the bankruptcy.&nbsp;



The selling pressure may not be as intense if his thesis about the original bitcoiners holds, because the cohort “typically does have a higher rate of BCH sympathy than the market as a whole.” However, that won’t abate all of the pressure.&nbsp;



K33 noted that there could be heavy shorting in BCH. “Notional open interest in BCH perps has ballooned by 9.1% following the Mt. Gox wallet consolidation today, alongside deeply negative funding rates,” analysts wrote.&nbsp;



To echo that, Galaxy thinks that 90% of the distributed BCH would “eventually” be sold.



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Mt Gox distributions may not be all doom and gloom for bitcoin

<h2 class="wp-block-heading">Don’t panic</h2>



Movement of bitcoin from the known Mt Gox wallet to a new address early Tuesday caused some, uh, concern in markets as investors fretted that $9 billion worth of bitcoin could be sold.&nbsp;



Obviously, that would be a huge pressure point on the market, but let’s be clear: That’s not the case…yet. And — depending on who you talk to — might not be the case at all.&nbsp;



Unlike the US bankruptcies <a href="https://blockworks.co/news/ftx-comparison-crypto-bankruptcies">we’ve talked about</a>, the Mt Gox bankruptcy is quite murky even as we near the end of a 10-year-long process (Mt Gox went bankrupt in 2014).&nbsp;



But a combination of factors — the overseas bankruptcy, the missing bitcoin, etc — made this case look a lot different than, say, FTX. Clearly, the market’s feeling anxiety over it based on the drop we saw yesterday.&nbsp;



So let’s look at what we know.



Former CEO Mark Karpelès assured people that the move early Tuesday was made to prepare for distributions. The estate then put out a <a href="https://www.mtgox.com/img/pdf/20240528_announcement_en.pdf">statement</a> echoing Karpelès. None of this is out of the norm, as the trustee has to prepare for the distributions, which have a deadline of October 21.&nbsp;



Earlier this year, people on Reddit started posting that they were receiving emails from the estate to confirm their identity and account details, in what seemed to be one of the first moves to repay customers. The emails also said that distributions would be made in-kind, meaning that creditors would receive bitcoin or bitcoin cash instead of fiat. (Though some were able to receive fiat payouts.)



That followed previous reports in December of customers <a href="https://blockworks.co/news/mt-gox-paypal-payment-creditors">receiving payouts in yen</a>.&nbsp;



Galaxy Research’s Alex Thorn offered some clarity in a research note late Tuesday, noting that the creditors had options for their payouts and some could opt for earlier payouts that took a bit off the top to make it more timely. Those willing to be patient could opt to wait a bit longer and receive a larger payout at a later date.&nbsp;



Thorn also believes that roughly 65,000 BTC/BCH will be returned to 20,000 individual creditors from now until September.&nbsp;&nbsp;



Here’s where things really get interesting. Thorn’s thesis on the distributions is slightly different from what we’ve seen from other research firms, many of which have said that they expect pressure on bitcoin’s price.&nbsp;



Speaking to funds with large claims, Thorn said that they’re “likely to distribute their BTC to LPs in-kind, and from speaking with several LPs in these funds, we do not believe there will be significant selling from this cohort.”



Overall, Thorn says the creditors he’s chatted with seem to be longer-term bitcoiners who wouldn’t be so willing to hit the sell button once the bitcoin’s moved to their wallet.&nbsp;



“Although it’s impossible to quantify, we believe the creditor base is comprised primarily of die-hard bitcoiners. Thousands of these creditors have waited 10 years for payouts and resisted compelling and aggressive claims’ offers during that time, suggesting they want their coins back,” he wrote.



But, we’re talking about billions of dollars in bitcoin here. The payout is tremendous and even 6,500 of the 65,000 bitcoin being sold could have a noticeable market impact. The question then becomes: What does the appetite look like?



There’s one last thing to add here and that’s that I’ve focused primarily on bitcoin, but bitcoin cash could see an entirely different response from creditors. Both K33 and Galaxy think that the BCH repayments could lead to “excess selling pressure” in BCH versus bitcoin.&nbsp;



— Katherine Ross



<h2 class="wp-block-heading">Data Center</h2>



<ul>
<li>BTC is <a href="https://www.coinbase.com/price/bitcoin">hovering</a> around $67,000, down half a percent.&nbsp;</li>



<li>AI tokens pull back: AR, AGIX and FET are all down more than 10% this week.</li>



<li>Weekly <a href="https://defillama.com/dexs">volumes</a> on DEXs Uniswap and Orca are up 40%, hitting $20.5 billion and $3.9 billion, respectively.</li>



<li>Optimism <a href="https://defillama.com/bridges/chains">inflows</a> have outstripped Arbitrum over the past week, $146.5 million to $99 million. </li>



<li>Grayscale saw outflows of $100 million yesterday, while BlackRock’s inflows topped $100 million per Farside <a href="https://farside.co.uk/?p=997">data</a>.</li>
</ul>



<h2 class="wp-block-heading">Below my line</h2>



Toncoin is all the rage right now. But if it goes any higher, it’s destined to butt heads with crypto’s meaty blue-chip barrier.



There are dozens or even hundreds of blue-chip stocks in traditional finance. Most would say crypto really only has two: bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) and ether (<a href="https://blockworks.co/price/eth">ETH</a>).



BTC and ETH make up nearly three-quarters of crypto’s entire market cap and it seems unlikely to change without a sudden ripper altcoin season.



Others might say that solana (<a href="https://blockworks.co/price/sol">SOL</a>) and binance coin (<a href="https://blockworks.co/price/bnb">BNB</a>) are blue-chip cryptocurrencies. It makes sense on the surface: both power well-used blockchain networks and have ties to some of the more long-standing and well-capitalized crypto companies in Binance and Solana Labs.



For the sake of this column, let’s use a very basic definition: Blue-chip cryptocurrencies are those with $60 billion market cap or more in our current and previous cycles.



BNB and SOL are at about $90 billion and $80 billion, respectively, and the next most valuable cryptocurrency is XRP (not counting stablecoins and lido staked eth), which hasn’t cracked the $40 billion mark for over two years.



<img decoding="async" src="https://lh7-us.googleusercontent.com/RA5uc4B5ATvbDfk-eSOF1y8fylNqryGWJsOnPharfM9tip8H2WHOgSNtfSvkIdUUUmZw2xMem2RcmymPAAdPTcO5ELsuG9r0bDfERi4eoKz-66KbEMRn_a2dDWLIfnMpHFKhVfXrofIYzjWOFJcuszQ" style="">



ADA, XRP and DOGE were valued much closer to BNB during the previous cycle



Cardano (<a href="https://blockworks.co/price/ada">ADA</a>), dogecoin (<a href="https://blockworks.co/price/doge">DOGE</a>), binance coin (BNB) and XRP briefly crossed over into blue-chip territory last cycle. Shiba Inu (<a href="https://blockworks.co/price/shib">SHIB</a>) and polkadot (<a href="https://blockworks.co/price/dot">DOT</a>) had potential but bounced off the edges of the blue-chip buffer — a moat between top assets and the masses — starting at $40 billion.



This time around, the blue-chip buffer is turning out to be a no man’s land for market caps. Only XRP has made it close over the past year, but toncoin (<a href="https://blockworks.co/price/ton">TON</a>), recently at record highs, seems ready to take a shot.



The Telegram-adjacent network is seeing a bunch of activity: <a href="https://blockworks.co/news/telegram-trading-bot-banana-gun">trading bots</a>, <a href="https://telegram.org/blog/monetization-for-channels">shared</a> ad revenue with content creators, the push-button-receive-crypto “<a href="https://decrypt.co/232137/notcoin-missions-passively-earn-crypto-heres-how">game</a>” Notcoin and cute tokenomics <a href="https://ton.vote/EQCb8dxevgHhBnsTodJKXaCrafplHzAHf1V2Adj0GVlhA5xI/proposal/EQAiqphPtZ2jLyzqrcfVrhBZfarghWKpkt0fSfALsqRbofQ7">stunts</a> have all contributed to a healthy growth narrative around Toncoin.&nbsp;



Whether it can break through the market’s psychological wall is another story.



— David Canellis



<h2 class="wp-block-heading">The Works</h2>



<ul>
<li>BlackRock’s IBIT <a href="https://bloom.bg/4bDLmqI">became</a> the world’s largest bitcoin fund, taking the crown from Grayscale.</li>



<li>The SEC was <a href="https://x.com/iampaulgrewal/status/1795511035870285827">ordered</a> to pay $1.8 million in legal fees in the Debt Box case, a judge ruled.</li>



<li>Deutsche Bank thinks that blockchain technology could help banks respond to margin compression, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-05-28/deutsche-bank-says-blockchains-can-help-weather-margin-pressure">reported</a>.</li>



<li>Former FTX executive Ryan Salame was <a href="https://blockworks.co/news/former-ftx-exec-ryan-salame-sentenced">sentenced</a> to 7.5 years in prison.</li>



<li>The New York Stock Exchange <a href="https://ir.theice.com/press/news-details/2024/The-New-York-Stock-Exchange-Announces-Collaboration-with-CoinDesk-Indices-to-Launch-Financial-Products-Tracking-Spot-Bitcoin-Prices/default.aspx">announced</a> a collaboration with CoinDesk Indices to “develop specific product offerings.”</li>
</ul>



<h2 class="wp-block-heading">The Morning Riff</h2>



Q: Should we be concerned about the Mt Gox repayments?



<hr class="wp-block-separator has-alpha-channel-opacity"/>



As I wrote above, this process has taken a decade. That’s honestly a lifetime in crypto. It wouldn’t be surprising if some folks want to make a little cash off of their coins, but I don’t think fretting about the would’ve, could’ve, should’ve of it all does the market — or your mental health — any good. It’s better to get the repayments over with, and this clears a major negative overhang for bitcoin.&nbsp;



Even if a lot of bitcoin is dumped on exchanges, there may have been no better time for this event to take place thanks to the <a href="https://blockworks.co/news/bitcoin-etf-inflows-amid-eth-etf-developments">bitcoin ETFs</a> and <a href="https://blockworks.co/news/13f-filings-institutional-appetite-bitcoin-etfs">institutional demand</a>. (I’m a broken record, I know.)



— Katherine Ross



Think of the Mt. Gox payouts as the yin to BlackRock’s yang.&nbsp;



Do I buy that the whole saga has molded a diamond-handed gang of bitcoiners that will hold the line, no matter how high or low we go? Eh. Maybe.&nbsp;&nbsp;



I agree though: Whatever happens, bitcoin markets will be just as relieved as creditors to put the whole thing to bed. Sooner the payouts happen, the sooner any dumps can be priced and we can concern troll about the next doomer narrative.



— David Canellis



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Empire Newsletter: Could bitcoin take a hit from Mt Gox creditors?

Michael McSweeney

Nearly a decade after Mt. Gox’s dramatic collapse, some of the defunct crypto exchange’s customers claim they have received their long-awaited repayments.



Posts to the Mt. Gox creditor subreddit, as well as posts in a dedicated Telegram channel, indicate that certain payments have indeed gone out — in the form of the Japanese yen, to creditors who appear to have chosen to receive such payments via PayPal.



“I got money!!” one user wrote on Reddit. “Got our PayPal!! Woohoo!” wrote another.



Yet the process appears to have run into some early trouble. Posts on Reddit indicate that a few creditors received double payments via PayPal. One user <a href="https://www.reddit.com/r/mtgoxinsolvency/comments/18r80uc/urgent_request_mtgox_notice_of_duplicate_paypal/">posted an email</a> they said was from the Mt Gox trustee, requesting a return of the extra payment.&nbsp;



In September, the Mt. Gox rehabilitation trustee Nobuaki Kobayashi had told creditors that the repayment deadline had been pushed back a year, from Oct. 31, 2023, to Oct. 31, 2024.&nbsp;



<a href="https://www.reddit.com/r/mtgoxinsolvency/comments/1811y1z/new_email_repayments_are_finally_happening_mtgox/">But last month</a>, Kobayashi wrote in a message to creditors that some cash repayments would be issued before the end of the year.&nbsp;



“The Rehabilitation Trustee plans to commence repayment to creditors shortly. The Rehabilitation Trustee is making efforts to commence repayments in cash within the 2023 calendar year,” Kobayashi’s November missive explained. “However, due to the large number of rehabilitation creditors who will receive repayment, the varying types of repayments, the different preparation and processing times required to make the repayment, repayments will continue into 2024.”



Mt. Gox failed in early 2014, triggering a global regulatory response and, closer to home, a nearly decade-long bankruptcy and corporate rehabilitation process. The exchange was the target of a string of hacks between 2011 and 2014. 



Earlier this year, a pair of Russian nationals were <a href="https://blockworks.co/news/doj-unseals-mt-gox-charges">indicted</a> by the US government for laundering funds stolen from Mt. Gox.



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Some Mt. Gox creditors says they’ve received repayments via PayPal

Ben Strack

The deadline for repayments related to funds lost in the Mt. Gox exchange hack has been pushed back yet again.



Initially set for the end of this October, a letter released on Thursday announced a one-year extension to the repayment schedule.



The once-popular Japanese exchange suffered multiple hacks between September 2011 and May 2014, leading to the loss of roughly 850,000 bitcoins belonging to customers and the company. Following the hack, Mt. Gox filed for bankruptcy and began liquidation proceedings in 2014.&nbsp;



The deadline extension to Oct. 31, 2024 is due in part to “the time required for rehabilitation creditors to provide the necessary information,” the <a href="https://www.mtgox.com/img/pdf/20230921_announcement_en.pdf">notice</a> states.&nbsp;



The rehabilitation trustee — named as attorney Nobuaki Kobayashi in the letter — must then “confirm such information and engage in discussions and share information with banks, fund transfer service providers, and designated cryptocurrency exchanges…involved in the repayments,” it adds.



The Tokyo District Court permitted the Mt. Gox trustee to push the deadline by a year for the base, early lump-sum and intermediate repayment, according to the letter.&nbsp;



Some waiting on repayments could still receive them in the near term, however.



According to the letter, those who have submitted the required information to the rehabilitation trustee could potentially receive their repayments by the end of this year. However, this timeline is “subject to change depending on the circumstances.”&nbsp;&nbsp;



Hedge fund firm Off The Chain Capital began acquiring Mt. Gox bankruptcy claims in 2019, <a href="https://blockworks.co/news/off-the-chain-capital-mt-gox">CEO Brian Estes told Blockworks in July</a>. Such claims accounted for about 25% of the company’s Off The Chain LP fund portfolio at the time, he noted.



“We expect distribution by the end of the year since we have been in the queue for several months,” Estes told Blockworks in an email Thursday.



The deadline extension comes after the US Department of Justice in June <a href="https://blockworks.co/news/doj-unseals-mt-gox-charges">brought charges against Alexey Bilyuchenko and Aleksandr Verner</a> in relation to the Mt. Gox hack. The two, along with unnamed co-conspirators, allegedly conspired to launder roughly 647,000 bitcoins, <a href="https://www.justice.gov/opa/pr/russian-nationals-charged-hacking-one-cryptocurrency-exchange-and-illicitly-operating-another">according</a> to the DOJ.&nbsp;



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Mt. Gox repayments postponed another year — at least for some

US charges against two Russian nationals tied to the 2011 hack of Mt. Gox, the then-massive bitcoin exchange, were unsealed on Friday.&nbsp;



The Department of Justice named Alexey Bilyuchenko and Aleksandr Verner with conspiracy to commit money laundering. Bilyuchenko was also charged in another investigation from the Northern District of California, which alleged that Bilyuchenko worked with Alexander Vinnik.&nbsp;



Bilyuchenko was charged with an additional count of money laundering conspiracy, as well as operating an unlicensed money services business.&nbsp;



Assistant Attorney General Kenneth Polite <a href="https://www.justice.gov/opa/pr/russian-nationals-charged-hacking-one-cryptocurrency-exchange-and-illicitly-operating-another">said</a> that the charges mark an “important milestone” in prosecutors’ dual “major cryptocurrency investigations.”&nbsp;



“As alleged in the indictments, starting in 2011, Bilyuchenko and Verner stole a massive amount of cryptocurrency from Mt. Gox, contributing to the exchange’s ultimate insolvency,” Polite said. “Armed with the ill-gotten gains from Mt. Gox, Bilyuchenko allegedly went on to help set up the notorious BTC-e virtual currency exchange, which laundered funds for cyber criminals worldwide.”&nbsp;



The Mt. Gox hack, which began in September 2011 and lasted through May 2014, resulted in the loss of approximately 647,000 bitcoins (<a href="https://blockworks.co/price/btc">BTC</a>). It went down as the largest ever disappearance of bitcoin in both bitcoin and dollar terms at the time, a designation that lasted for years.&nbsp;&nbsp;



Bilyuchenko and Verner, as well as additional unnamed co-conspirators, were behind the theft from Mt. Gox, prosecutors said.&nbsp;



“According to court documents unsealed in the Southern District of New York (SDNY), in or about September 2011, Bilyuchenko, Verner, and their co-conspirators allegedly gained unauthorized access to the server holding the cryptocurrency wallets for Mt. Gox,” the DOJ’s statement said.&nbsp;



Prosecutors said that “between in or about March 2012 and in or about April 2013, the New York Bitcoin Broker allegedly transferred more than approximately $6.6 million to overseas bank accounts controlled by Bilyuchenko, Verner, and their co-conspirators.”



“In exchange for the wire transfers, the New York Bitcoin Broker allegedly received “credit” on Exchange-1, through which Bilyuchenko, Verner, and their co-conspirators allegedly laundered more than 300,000 of the bitcoins stolen from Mt. Gox,” the release continued.



The claims additionally tie Bilyuchenko to bitcoin launderer Vinnik to operate BTC-e from 2011 to 2017.



Vinnik was <a href="https://blockworks.co/news/bitcoin-launderer-prisoner-swap">charged with a 21-count indictment</a> in 2017, which alleged he had laundered over $4 billion in bitcoin through BTC-e.&nbsp;



Last August, <a href="https://blockworks.co/news/alleged-bitcoin-launderer-extradited-to-us-after-5-years-in-jail">he was extradited </a>to the US to face charges.



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DOJ unseals Mt. Gox charges against 2 Russian nationals

Shalini Nagarajan

As the dust from a chaotic year settles, global exchange Binance is enjoying more dominance than ever, commanding as much as 92% of <a href="https://www.blockworksresearch.com/assets/btc" target="_blank" rel="noreferrer noopener">bitcoin</a> spot volume.



That’s according to an end-of-year study by Arcane Research. The firm also found Binance made up 66% of crypto perp volume and 61% of BTC derivatives volume by the end of 2022.



“There are no other evident ‘winners’ of 2022 other than Binance when it comes to the crypto market structure and market dominance,” Arcane Research said.



Arcane said it would have to go back all the way to <a href="https://www.investopedia.com/terms/m/mt-gox.asp">Mt. Gox’s</a> heyday — one decade ago — to establish a period where a single exchange dominated BTC spot volumes like Binance. 



Mt. Gox, one of the earliest bitcoin exchanges, <a href="https://www.wsj.com/articles/BL-263B-352" target="_blank" rel="noreferrer noopener">reportedly</a> handled as much as 70% of all bitcoin trading in 2013. The platform would dramatically implode the following year, leaving users out of pocket by 850,000 BTC ($500 million then, $14.3 billion today).



“However, the comparison to Mt. Gox stops there. While trading volumes are currently largely concentrated on Binance, BTC reserves are not,” Arcane said. 



Binance’s bitcoin balance makes up only around 25% of all BTC held on exchanges, the firm found, translating to less systemic risks today than the Mt. Gox era.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="362" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png" alt="" class="wp-image-43264" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=80 80w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Source: Arcane Research</figcaption></figure>



Binance <a href="https://blockworks.co/news/binance-us-zero-fee-bitcoin-trading-may-trigger-fee-war-for-exchangesng-10435147c55d4a40b64fcbf43cb46329" target="_blank" rel="noreferrer noopener">launched zero-fee trading</a> for BTC spot pairs in July last year, a move attributed with solidifying its dominance — especially leading into FTX’s collapse in November. 



Arcane predicted that Binance would revert and start charging BTC trading fees once more, which would normalize its market share.



Arcane addressed whether the reported spot volumes can be trusted. Crypto trading volumes can be notoriously difficult to truly measure <a href="https://tokeninsight.medium.com/nearly-50-of-exchanges-show-less-than-half-of-the-claimed-real-trading-volume-wash-trading-8ff214a0e24e" target="_blank" rel="noreferrer noopener">considering</a> the <a href="https://twitter.com/cz_binance/status/1545451961222324225" target="_blank" rel="noreferrer noopener">prevalence</a> of <a href="https://www.nber.org/system/files/working_papers/w30783/w30783.pdf" target="_blank" rel="noreferrer noopener">wash trading</a>. 



“While the organic nature of some of this volume may be negotiable, it’s non-negotiable that this has consolidated Binance’s dominance over BTC spot markets,” Arcane said.



Other factors contributing to Binance’s success were its growing branded stablecoin BUSD, its native token <a href="https://www.blockworksresearch.com/assets/bnb" target="_blank" rel="noreferrer noopener">BNB</a> (which outperformed BTC and <a href="https://www.blockworksresearch.com/assets/eth" target="_blank" rel="noreferrer noopener">ETH</a>) and its steady staff headcount compared to its peers.



Binance did however take risks with some big investments last year, including <a href="https://blockworks.co/news/what-does-binances-investment-in-twitter-mean-for-the-social-networks-future" target="_blank" rel="noreferrer noopener">$500 million</a> in Elon Musk’s Twitter deal, <a href="https://www.forbes.com/sites/forbespr/2022/02/10/forbes-announces-200-million-strategic-investment-from-binance/?sh=6e0c497b57e2" target="_blank" rel="noreferrer noopener">$200 million</a> in Forbes and <a href="https://blockworks.co/news/binance-us-agrees-to-purchase-voyager-for-at-least-1b" target="_blank" rel="noreferrer noopener">$1 billion</a> for crypto lender Voyager’s assets.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="262" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png" alt="" class="wp-image-43265" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=80 80w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Source: Arcane Research</figcaption></figure>



Binance’s outsized market share only compounds the importance of its ability to process withdrawals. Jitters arose last month after Binance registered <a href="https://blockworks.co/news/fud-or-fact-binance-rumors-analyzed" target="_blank" rel="noreferrer noopener">$1.9 billion of withdrawals</a> in 24 hours, leading the exchange to temporarily cease withdrawals of stablecoin USDC.



That was the <a href="https://twitter.com/nansen_ai/status/1602618067598442503" target="_blank" rel="noreferrer noopener">largest exchange daily outflow</a> over a 24-hour period since June, according to Nansen. Binance CEO Changpeng Zhao deemed the withdrawals “business as usual.”



Arcane expects Binance’s dominance in the spot market will wane in 2023 while the dominance of BUSD will rise. It also reckons its share of crypto perp open interest will remain this year.



A Binance spokesperson reacted to Arcane’s report with another Zhao quote: “Binance is focused on the things that matter the most: building and staying user-focused.&#8221;



David Canellis contributed reporting.



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Binance Dominance Harks Back To Mt. Gox Heyday: Arcane

<div id="highlights-block_62ece8f513e8b" class="highlights">
 <ul>
 <li>The US charged Vinnik and defunct crypto exchange BTC-e in 2017 over illegal profits</li>
 <li>He&#8217;s alleged to have played a role in laundering bitcoin stolen in the Mt. Gox hack</li>
 </ul>
 
</div>



Alleged bitcoin launderer Alexander Vinnik has been extradited to the US, some five years after his initial indictment.



Vinnik, a Russian national, was the alleged operator of defunct cryptocurrency exchange BTC-e. He left Greece on Thursday after facing arrest in several countries.



“Alexander was transferred from Paris to Athens yesterday in the early afternoon,” his French lawyer Frédéric Bélot told Blockworks in an emailed statement on Friday. “Then he was transferred from Athens to Boston (to refuel) and he arrived in San Francisco during the night.”



The lawyer added that he would continue to defend Vinnik alongside American counsel. Vinnik faces up to 55 years in US prison.



<a href="https://edition.cnn.com/2022/08/04/politics/russian-bitcoin-extradited-us/index.html" target="_blank" rel="noreferrer noopener">CNN</a>, which first reported the development, said Vinnik is expected to appear in court in the Northern District of California. The report didn’t mention a date of appearance.



Vinnik was <a href="https://www.justice.gov/usao-ndca/pr/russian-national-and-bitcoin-exchange-charged-21-count-indictment-operating-alleged" target="_blank" rel="noreferrer noopener">charged</a> in 2017 for operating an unlicensed money service business and alleged money laundering. The Department of Justice accused him of a long list of crimes including stealing identities, enabling drug trafficking and helping to launder criminal proceeds.&nbsp;



He was <a href="https://www.occrp.org/en/daily/13495-france-sentences-russian-crypto-launderer-to-five-years-jail" target="_blank" rel="noreferrer noopener">arrested</a> in Greece at the US’ request that year while on a family vacation. The US, France and Russia have battled over his extradition ever since.



France was successful in 2020, where Vinnik faced five years in prison for alleged money laundering. More recently, the US <a href="https://www.coindesk.com/business/2022/07/22/us-calls-off-extradition-request-for-btc-e-operator-alexander-vinnik/" target="_blank" rel="noreferrer noopener">reportedly</a> called off its own extradition request. But his lawyer suggested that was a distraction trick aimed at expediting the process through Greece — where Vinnik was initially arrested.



<h3 class="wp-block-heading">Vinnik believes he&#8217;s not a bitcoin launderer</h3>



Vinnik, via BTC-e, is said to have handled some of the <a href="https://www.theverge.com/2017/7/29/16060344/btce-bitcoin-exchange-takedown-mt-gox-theft-law-enforcement" target="_blank" rel="noreferrer noopener">530,000 bitcoin</a> (around $9 million back then, nearly $13 billion today) stolen from Mt. Gox, where he allegedly served as the platform&#8217;s administrator. 



He told <a href="https://russian.rt.com/world/article/427168-vinnik-bitcoin-rossiya-ssha-interviyu" target="_blank" rel="noreferrer noopener">Russia Today</a> in 2017 that he didn’t consider himself guilty. According to him, the US had no right to judge a Russian citizen.



His wife told the same outlet she was convinced the US was after him for his “<a href="https://www.rt.com/news/402462-vinnik-wife-interview-extradition/" target="_blank" rel="noreferrer noopener">intellectual abilities</a>,” and denied he ever ran BTC-e.



BTC-e was founded in 2011 and allowed trading between the US dollar, Russian ruble, some European currencies, bitcoin, litecoin and ether. 



The exchange, which shut shop in 2017 after a 21-count indictment, received over $4 billion in bitcoin during its operation, according to the US Department of Justice.&nbsp;



The Financial Crimes Enforcement Network imposed a $110 million fine on BTC-e and a $12 million fine against Vinnik for their role in the violations in 2017.



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