NYDIG Report: Bitcoin Volatility Expected Around ETF Dates, Mt Gox Delays, and Fed Rate Impacts

Key ETF Dates Stir Volatility Expectations in Options Market

The options market is signaling potential significant price movements in bitcoin around crucial ETF dates, according to NYDIG weekly report. The forward volatility of at-the-money (ATM) options from October 13th to October 20th, 2023, has surged by 9.6 points. This data suggests traders anticipate a 5.5% single-day move in bitcoin’s spot price during this period. The SEC is set to respond to the BlackRock iShares Bitcoin Trust ETF by October 17th, 2023. Additionally, the SEC has until October 16th to address the Bitwise Bitcoin ETP Trust. Market data indicates traders are bracing for price swings, possibly due to an approval or denial. Another pivotal date is October 13th, the last day for the SEC to appeal the Grayscale case decision.

Mt Gox Delays Creditor Payouts to 2024

The Mt Gox bankruptcy trustee has postponed creditor payouts by a year, moving the deadline from October 31st, 2023, to October 31st, 2024. This delay extends the resolution of a significant event in crypto history, involving approximately 138K BTC, valued at roughly $3.7 billion at current rates. The industry has closely monitored the fund disbursement due to its potential market impact. The resolution has been pushed to 2024.

Fed Rate Policy Sends Ripples Through Financial Markets

The Federal Open Market Committee (FOMC) decided to maintain current interest rates this week. However, hints of a potential rate hike later this year caused asset prices, including stocks and bonds, to decline. Bitcoin initially dipped but ended the week unchanged, contrasting with the performance of stocks and bonds. Over the years, various macroeconomic factors have been proposed as influencers of bitcoin’s price. Yet, none consistently explain its decade-long price history. While some factors, like inflation expectations, may play a role in shorter time frames, bitcoin’s unique characteristics remain its primary price drivers.

Market Overview

Bitcoin’s price remained relatively stable despite weekly fluctuations. In contrast, equities faced challenges due to looming interest rate hike uncertainties. The S&P 500 fell by 2.3%, and the Nasdaq Composite dropped by 5.0%. The fixed income market also saw declines, with investment grade corporate bonds, high yield bonds, and long-term US Treasuries falling by 1.3%, 1.4%, and 3.0%, respectively. Gold’s price slightly increased by 0.4%, while oil declined by 0.6% after a recent rally.

Other Noteworthy News

Mt Gox announced a change in repayment deadlines.

Grayscale Investments is filing for a new Ether Futures ETF.

The NYDFS updated its virtual currency oversight.

The Lazarus Group is reportedly intensifying its crypto hacking efforts.

The U.S. SEC’s Crypto Enforcement Chief hinted that charges might extend beyond Coinbase and Binance.

Citi is developing new digital asset capabilities for institutional clients.

DTCC collaborates with Chainlink to bring capital markets on-chain.

Tether resumes its stablecoin lending and invests $420 million in cloud GPUs.

PayPal USD is now accessible on Venmo.

Upcoming Events

September 29: CME expiry

October 3: Valkyrie Bitcoin and Ether Strategy ETF effective date

October 13: SEC appeal deadline in Grayscale case

October 16: SEC’s response date for the first spot bitcoin ETF (Bitwise)

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Mt. Gox Updates Creditors on Repayment Progress

Mt. Gox, once the largest cryptocurrency exchange, has been embroiled in a lengthy process of repaying its creditors since it was forced to shut down in 2014 after a massive hack that resulted in the loss of 850,000 Bitcoin (BTC). Despite subsequent high-profile crypto thefts, Mt. Gox’s demise remains the greatest cryptocurrency robbery in history.

In 2018, a Japanese court approved a compensation plan, but delays have continued to surround the repayment of funds to those affected. In March 2020, Nobuaki Kobayashi, the rehabilitation trustee for Mt. Gox, announced a new system for the remaining funds to be claimed by creditors through proof of claim via bank statements, transaction records, and identification documents.

The deadline for submitting claims was initially set for October 2020 but was later pushed back to December. After all claims were received, the total amount owed to creditors was nearly $16 billion, more than what was available for repayments.

On April 7, 2023, the company released a statement from Nobuaki Kobayashi, announcing that the deadline for creditors to provide their repayment information had passed. The statement also provided an update on the repayment process, stating that “base repayment, intermediate repayment, and early lump-sum repayments” will be carried out until October 31, 2023, with the possibility of an extension with the permission of the Tokyo District Court.

The statement further indicated that the trustee would carry out the necessary preparations for the repayments, including confirming the selections for repayment and sharing the information with banks, fund transfer providers, cryptocurrency exchanges, or any other custodian involved in the repayment.

However, due to the necessary preparations, the statement also noted that it is expected to take some time before the repayment is commenced. This news may disappoint some creditors who have been waiting for several years for their funds to be returned.

It is worth noting that in February 2023, the Mt. Gox Investment Fund, the largest creditor, decided to go for the option of an early payout in BTC for 90% of what is owed instead of waiting longer for a larger payment. This decision may have been driven by the uncertainty surrounding the repayment process and the desire to secure some form of payment sooner rather than later.

In conclusion, the saga of the Mt. Gox cryptocurrency exchange and the repayment of its creditors continues to drag on, with no clear end in sight. While the recent update provides some information on the repayment process, it is clear that it will take some time before the repayments are actually carried out. In the meantime, creditors will have to remain patient and hope that the process eventually comes to a satisfactory conclusion.


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Mt. Gox Creditors Given Extra Month to Register Claims, Distribution Deadline Delayed

Mt. Gox was a cryptocurrency exchange that was situated in Tokyo. At one point in time, it was responsible for more than 70% of all Bitcoin transactions. In 2014, the exchange suffered a hacking attack, which led to the theft of thousands of Bitcoin and the subsequent filing of a bankruptcy claim by the exchange. Since then, creditors have been holding out hope that they would eventually be compensated for the damages they sustained.

The official document cites a number of reasons for the postponement in the registration and distribution deadlines, one of which is the progress that rehabilitation creditors have achieved in regard to the selection and registration. Creditors have the choice of obtaining payment in the form of a lump amount, having their funds sent by a bank or another provider of money transfer services, or transacting with a cryptocurrency exchange or custodian.

Since the exchange went bankrupt, the delay in the payment has been a source of concern, especially in light of the large rise in value of Bitcoin that has occurred since the collapse of the exchange. There has been conjecture over the effect that creditors of Mt. Gox selling their assets may have on the market if they made that decision. Yet, according to a story that was published by Bloomberg not too long ago, the major creditors of Mt. Gox have no intentions to liquidate any of their Bitcoin holdings.

Creditors of Mt. Gox have been given some breathing room thanks to the extension of the registration and distribution deadlines. This gives the creditors more time to submit claims and decide how they would want to be compensated for their losses. As the cryptocurrency industry continues to mature, it is absolutely essential that exchanges place a high priority on security measures in order to forestall the occurrence of incidents similar to those that have already occurred in the past. This will ensure the safety of creditors as well as investors.


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Mt. Gox Creditor Refutes Fake Report about Upcoming 140K BTC Release

Eric Wall, one of the creditors of the now-defunct Mt. Gox cryptocurrency exchange, has refuted claims that the exchange plans to distribute 140,000 Bitcoins soon to the affected investors.

Mt. Gox, the world’s largest Bitcoin exchange at the time, collapsed in 2014 after it was hacked. Half a billion dollars worth of the cryptocurrency was stolen from the firm, thus leaving affected customers empty-handed.  

Last Saturday, Wall clarified that “the payout system has not yet been developed, and not even a list of exchanges where affected investors can choose to get their rewards is complete. There are currently no set final dates.”

He also shared details that Bitcoin and Bitcoin Cash payments will be made in instalments. Wall further said that some of the creditors have already sold their claims to Fortress Investment Group LLC, a New York-based private equity firm, which issued a “premium” offer to buy out creditor claims from Mt. Gox in February 2020.

Over the weekend, claims emerged that Mt. Gox will begin compensating customers for Bitcoin the following day (on Sunday August 28 2022). Many people were concerned by the announcement, viewing the rumour as a “black swan” for the crypto market.

The panic is reported to have created additional pressure on Bitcoin and the rest of the market, which already suppressed significantly on Friday after Federal Reserve Chair Jerome Powell delivered hawkish remarks on an economic policy designed to bring down inflation. At that time, the Bitcoin price dropped below $20,000.

According to Wall, those responsible for the fake news about Mt. Gox’s payouts could have decided to play ahead of the curve based on the July news about the exchange’s plans for compensation payments.

Mt. Gox Hack

On July 7, the Mt. Gox rehabilitation trustee (the trustee holding what is left after the collapse of Mt. Gox) announced plans to fast-track payouts, asking creditors to choose between Bitcoin, cash, or Bitcoin Cash to receive repayment.

The Mt. Gox trustee noted that claims for compensation from victims would be accepted until August, and then a period of review and payout would start. However, a specific date or any other specific information with regard to payouts was not given.

Mt. Gox was one of the first Bitcoin exchanges in the world and began automated trading on July 18, 2010.  The exchange once represented over 80% of the global Bitcoin trading volume.

On February 28, 2014, the exchange filed for bankruptcy after finding out it was hacked and losing most of its funds.

Mt. Gox went bankrupt after 850,000 Bitcoins were reported missing. Later, the firm managed to recover 200,000 Bitcoin. And these have since increased in value significantly. This means creditors may be able to get more value from the disaster than they lost during the bankruptcy.

While a few years back, the trustee sold roughly 50,000 Bitcoins for some US$600 million, the remaining Bitcoins are due to be distributed anytime currently.

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Bitfinex-backed LEO soars to record high on supply crunch expectations

Unus Sed Leo (LEO) surged by almost 70% on Feb. 9 to reach its record highs as traders assessed the potential of an incoming supply crunch in its market.

The token was issued in 2016 to refinance crypto exchange Bitfinex after it lost about $70 million worth of Bitcoin (BTC) in a hacking incident. In its original whitepaper explaining LEO, Bitfinex had promised that if they could recover the lost funds, they would use 80% of the proceeds to buy back and burn LEO.

Around 80% of stolen Bitcoin recovered

On Feb. 8, the U.S. Department of Justice (DOJ) announced that it last week had seized over $3.6 billion worth of Bitcoin stolen — around 94,000 BTC — from Bitfinex in 2016, valued as per the current bitcoin-to-dollar exchange rates. Overall, Bitfinex had lost 119,754 BTC to the hack, meaning the cryptocurrency tied to the incident was worth around $4.5 billion at the time of DOJ’s seizure.

Bitfinex confirmed its promise to use the recovered funds to buy back and burn LEO tokens in a statement issued Tuesday, noting that the process would complete within 18 months of the date it receives the amount.

DOJ officials told the press that they plan to set up a court process for victims to reclaim their stolen Bitcoin funds.

Nonetheless, they did not disclose how long the process would take to finish. If past is any indication, crypto refunds tied to exchange-related hacks take time. For instance, victims of Mt. Gox’s $460-million hack — from 2013 — are still waiting for their refunds.

But LEO bulls ignored such red flags and went ahead with raising their bids for the token this Tuesday, anticipating that the upcoming supply crunch would make the token more valuable in the long run. As it happened, LEO’s price rose to its all-time high of $8.144, only to follow the upside move with a correction that saw the token going to as low as $7.04 early on Wednesday.

LEO/USD daily price chart. Source: TradingView

Mixed outlook for LEO

Adam Cochran, Partner at activist venture capital firm Cinneamhain Ventures, identified problems with the ongoing LEO price rally, noting that not all the recovered funds would go through Bitfinex unless those holdings belong to the exchange themselves.

“There could, of course, be some weird deal structure in place, with the custom tokens Bitfinex issued, where they essentially claim they bought the loss off of other customers and so the Bitcoin is theirs and they can claim it all, and then later distribute,” the executive tweeted Tuesday, adding that he “personally” won’t be purchasing LEO while expecting a quick buyback from Bitfinex.

Related: Bitfinex hack recovery spurs crypto community responses

Conversely, Alexander Mamasidikov, co-founder of crypto wallet service, MinePlex, called the recovery of Bitfinex funds a “right fundamental” that could back LEO’s growth in the future.

“Native to Bitfinex, LEO has the chance of tagging along with the future ecosystem growth of the trading platform, a move that is billed to guarantee the coin’s continuous uptrend,” said, adding:

“LEO is arguably underpriced when compared to the native tokens of its major competitors. In the mid-term, LEO is poised to touch the $10 resistance point while a quarterly close of $12 is likely should this current growth pace be sustained.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.