After a decade-long wait, creditors of the defunct Mt Gox exchange are set to receive in-kind distributions of bitcoin and bitcoin cash starting in July. The head of research from Galaxy Digital predicts the market impact of these distributions will be less severe than anticipated.
Galaxy Digital's Alex Thorn: Mt Gox Bitcoin Distributions Unlikely to Disrupt Market
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Long-Term Bitcoin Holders Likely to Retain Mt Gox Bitcoin Distributions
According to Alex Thorn, head of research at Galaxy Digital, the Mt Gox trustee’s decision to begin distributing 141,868 BTC and BCH has sparked widespread speculation. However, detailed analysis of bankruptcy filings and discussions with creditors indicate that fewer coins than expected will actually be distributed, potentially reducing the pressure to sell bitcoin on the open market.
Thorn said the recovered coins represent only about 15% of the nearly 940,000 BTC lost by Mt Gox, originally valued at $424 million. Despite this modest recovery rate, the surge in bitcoin’s value over the years translates to a monumental 140-fold increase in dollar terms for creditors. The Galaxy researcher noted that to expedite payments, approximately 75% of creditors have opted for an “early payout,” accepting a 10% reduction on their claims.
Notably, Thorn discussed the profile of Mt Gox’s creditors—predominantly long-term bitcoin holders and tech-savvy early adopters—suggests a strong likelihood of holding onto their distributed coins rather than selling them. The researcher highlighted how many have resisted attractive cash buyout offers over the years, highlighting a preference for retaining their bitcoin holdings despite the potential capital gains implications of selling at current high prices.
Thorn concluded that the nuanced understanding of creditor behavior, combined with the actual distribution mechanics and the overall liquidity of bitcoin suggests that the market may absorb these new coin distributions more smoothly than many fear. As these events unfold, the market’s response will offer critical insights into the dynamics of supply and demand within the bitcoin market economy.
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