A Bitcoin trader protests against the Mt. Gox exchange in Tokyo in February, 2014. Two trading 'bots' were later proved to have significantly increased and manipulated trade at the now defunct Bitcoin exchange. Photo: AFP/Yoshikazu Tsuno
The collapse of Japan’s Mt Gox, the world's first Bitcoin exchange following a hack in 2014, caused a worldwide legal battle for assets reportedly worth $3.5 billion. The digital asset sector still has no global regulatory structure. Photo: AFP/Yoshikazu Tsuno

Many have speculated about what sparked the end of the Bitcoin bull run and the subsequent sell-off in 2018, that has lasted more than one year and resulted in a market crash of over 85%. A new report by GoxDox now suggests that a trustee of the collapsed Mt Gox Bitcoin exchange flooded the market and this caused prices to collapse in the early part of 2018.

Japan’s Mt Gox, the world’s first Bitcoin exchange, grew rapidly in 2010 and 2011 before its eventual collapse following a hack and the siphoning of more than 744,000 Bitcoins in early 2014. A year-long global crypto bear market followed as the price of Bitcoin collapsed by more than 80% in 2014 and 2015 before its eventual recovery and epic surge in 2017.

Nobuaki Kobayashi, the trustee of Mt Gox – that in its heyday handled 70% of all global Bitcoin transactions – has, according to the new GoxDox report, disappeared. The report also argues that the five-year-long legal battle around the distribution of the exchange’s remaining assets – that was said to be worth more than $3.5 billion at Bitcoin’s peak in December 2017  – is far from over.

The GoxDox site published a number of posts around the time of the exchange’s shutdown in 2014 but this is its first post in a number of years.

The post refers to what it calls “dumpening” which it says describes Kobayashi’s offloading of a significant amount of Bitcoin via various Japanese agents and services. It also compares Bitcoin transaction records alongside market price trends that it says shows payments were made by the  Japanese exchange BitPoint, in Japanese Yen, to the Mt Gox Estate from February 2018 to June 2018.

GoxDox says its evidence shows these payments amounted to several billion Yen. One billion yen is approximately US$1.09 million.

In March last year, Kobayashi admitted he had been selling Bitcoin via OTC, or over the counter, markets: “I sold BTC and BCC (Bitcoin Cash) from December 2017 to February 2018 with the cooperation of a crypto-currency exchange in light of the market price at the time of the sale. Following consultation with cryptocurrency experts, I sold BTC and BCC, not by an ordinary sale through the BTC/BCC exchange, but in a manner that would avoid affecting the market price,”

However, the GoxDox site is attributing the Bitcoin rallies and subsequent slumps of last summer to the financial activities of this single trustee. It concluded that an auction of the Mt Gox estate would have had limited damage on crypto markets as a whole but the “selfishness” of Kobayashi and the Japanese exchange’s estate prevailed.

Whatever the truth here, clearly the dark clouds of the Mt Gox crypto exchange still lingers over the wider markets five years later. 


Asia Times has relaunched on www.asiatimes.com. Download our brand new native App for a sweeping selection of geopolitical and business news from across Asia.

Join the Conversation

1 Comment

Leave a comment