Tokyo bankruptcy trustee selling off huge lots of bitcoin from Mt Gox bankruptcy

Nobuaki Kobayashi is a Tokyo attorney and bankruptcy trustee for the defunct Mt. Gox cryptocurrency exchange who is selling large lots of bitcoin and bitcoin cash and has been doing so since late last September.

Kobayashi has sold about $400 million of the coins since then and is holding another $1.9 billion at present. He will consider selling them as well in order to pay off Mt. Gox's creditors. Mt. Gox had been once the world's largest bitcoin exchange before filing for bankruptcy 4 years ago.

Bitcoin whales

Whales are individuals or groups who hold sufficiently large quantities of a coin that it is thought they can influence the market by buying or selling large amounts of the coin. Koboyashi has large amounts of bitcoin and so could be regarded as a bitcoin whale. However, Kobayashi is not both a buyer and a seller as whales are usually. Koboyashi is trying to sell off his bitcoin at the highest price he can. If he sells too much at once he could drive the price down not something he wants to do.

Whales are more likely to have significant effects in smaller cryptocoin markets compared to that of bitcoin which is the largest coin by market cap. The term whale is used because whales are the largest creature in the ocean as compared to small fish which they can overpower. Similarly it is thought that large traders can effect groups of small traders.

Mt. Gox

Mt. Gox was a bitcoin exchange in Tokyo Japan that was launched in July 2010. By 2013 it was handling more than 70 percent of all bitcoin transactions globally and was the world's largest and leading bitcoin exchange.

However, in February of 2014 the exchange suspended trading, and closed its website and exchange services. It then filed for bankruptcy protection from creditors. In April of 2014 it began liquidation proceedings.

Mt. Gox announced that approximately 850,000 bitcoins belonging to customers and the company were missing and likely stolen, an amount valued at more than $450 million at the time. 200,000 bitcoins have since been "found". The reasons for the disappearance of the others was at first unclear although the exchange suggested it was through a hacker. Some thought it might have been fraud or mismanagement as well. In April 2015 new evidence provided by Tokyo security company WizSec led to the conclusion that "most or all of the missing bitcoins were stolen straight out of the Mt. Gox hot wallet over time, beginning in late 2011."

In August of 2015, the CEO of Mt. Gox, Mark Karpeles was arrested by Japanese police. He was charged with fraud and embezzlement as well as manipulating the Mt. Gox computer system to increase the balance in the account. Japanese prosecutors accused him also of misappropriating $2.6 million in bitcoin that was deposited in trading accounts and moving it to another account he controlled. This was six months before the exchange failed.

Kobayashi trying to get highest price possible for the bitcoin he sells

Kobayashi's report on his sales since November show his sales averaged $10,105 per coin. This is not too far off what bitcoin is trading for recently. Kobayashi has plenty of bitcoins left to sell. If he sells too many at once the coin could reach an oversold position and the price could fall. No doubt his strategy will be to sell large lots but not too large and sell them when bitcoin's price is rising.

Previously published in Digital Journal