Mt. Gox about to unload $9 billion of bitcoin — what it means for BTC

A bitcoin exchange that collapsed 10 years ago after being hacked is set to return billions of dollars’ worth of the token to users — and it has investors worried.

In a few days, bankrupt Tokyo-based bitcoin exchange Mt. Gox will begin paying back thousands of users almost $9 billion worth of tokens. The platform went under in 2014 following a series of heists that cost it in the range of 650,000 to 950,000 bitcoins, or upward of $59 billion, at current prices.

The payout follows a protracted bankruptcy process that’s involved multiple delays and legal challenges.

On Monday, the court-appointed trustee overseeing the exchange’s bankruptcy proceedings said distributions to the firm’s roughly 20,000 creditors would begin in early July. Disbursements will be in a mix of bitcoin and bitcoin cash, an early offshoot of the original cryptocurrency.

While this is good news for victims of the hack who have spent years waiting to be made whole, the price of bitcoin slid to $59,000 last week, in the crypto market’s second-worst weekly decline of the year.

CNBC spoke to half a dozen analysts to get their take on what to expect when roughly 141,000 bitcoins — or roughly 0.7% of the total 19.7 million bitcoins outstanding — are returned to Mt. Gox victims this week.

Mt. Gox — short for “Magic: The Gathering Online Exchange” — was once the largest spot bitcoin exchange globally, claiming to handle around 80% of all global dollar trades for bitcoin.

When it shuttered in February 2014, bitcoin was worth around $600.

As of Monday, the world’s largest cryptocurrency is trading at about $62,000 per coin. That means users opting to be reimbursed in kind — that is, in the cryptocurrency itself, rather than the cash equivalent — have seen the value of their coins surge more than 10,000% in the last decade.

John Glover, chief investment officer of crypto lending firm Ledn, told CNBC the windfall for Mt. Gox users would likely translate to huge sales in bitcoin as investors look to lock in gains.

“Many will clearly cash out and enjoy the fact that having their assets stuck in the Mt. Gox bankruptcy was the best investment they ever made,” said Glover, who was previously a managing director at Barclays. “Some will clearly choose to take the money and run,” added Glover.

James Butterfill, head of research at CoinShares, told CNBC the overhang of the nearly $9 billion of bitcoin set to be released has “long been a concern for those with bullish views on bitcoin.”

“Consequently, the market is highly sensitive to any related news. With the announcement that the Trust will begin selling in July, investors are understandably worried,” said Butterfill.

It wouldn’t be the first time bitcoin’s moved in reaction to big redemptions of funds locked up in centralized trading platforms.

Last month, crypto exchange Gemini returned more than $2 billion worth of…