The mystery behind Bitcoin’s recent crash: Did Mt. Gox and the US government cause it?

After a brief crash, Bitcoin (BTC) is back on track toward surpassing the critical level at $30,000, pulling most of the cryptocurrency market up with it. But were the crypto wallets connected to Mt. Gox and the United States government truly to blame for the latest collapse, as the rumors suggest?

Indeed, speculation has been running that the now-defunct crypto exchange Mt. Gox was moving its reserves, as well as that the US government was selling some of the Bitcoin seized in criminal investigations, and that this had caused the massive sell-off that brought the price down.

The offending alerts

As it happens, this whole rumor started after Twitter user db shared an alert from blockchain analytics firm Arkham, claiming that the wallets linked to Mt. Gox and the US government were moving massive amounts of the flagship decentralized finance (DeFi) asset.

Originally, the company originally said that the alerts wet out in error after a “bug fix,” only to later correct itself, stating that the alerts did, in fact, go out correctly but that db had erroneously configured them:

“We have conducted an investigation of the DB Alert situation and determined that the Arkham alerts were sent accurately in this case. DB set two alerts on all Bitcoin transactions above $10k USD, with no counterparties set, then named the alerts ‘Mt Gox’ and ‘US Gov.’”

Indeed, Julio Moreno, head of research at the on-chain analytics provider CryptoQuant, said that his platform did not see any of the activity that the rumors suggest, neither from Mt. Gox nor the US Government, sharing the charts and links where users can verify this information.

There have been speculation about Mt Gox reserves moving and US Government selling some of their seized bitcoin.

We have not seen this according to the address we track.

Track it here:
US Gov: https://t.co/VRnD6acTod

Mt. Got: https://t.co/nGsD574byL pic.twitter.com/6JdVReDyrc

— Julio Moreno (@jjcmoreno) April 26, 2023

But what if?

In the event that Mt. Gox truly starts compensating the creditors suddenly and en masse, and the US government begins selling off the seized Bitcoin, the effect on the market would not be so catastrophic, according to a report shared by crypto services provider Matrixport on its Telegram channel on April 27.

As the report states:

“We have analyzed the potential market impact back and forth and do not think this would be a big deal. The market should be well aware of the eventual distribution of those Bitcoins.”

Detailing the civil rehabilitation plan and deadlines for the 10,000 affected Mt.Gox customers around the world after the widely publicized hack, the platform explained:

“The hacks resulted in 850,000 stolen Bitcoin valued at $500 million at the time and worth $17.8 billion today. Only 200,000 BTC has since been recovered. (…) Since not all of the stolen BTC could be recovered, only a fraction of the original amount held by creditors will be compensated.”

Meanwhile, Bitcoin was at press time changing hands at the price of $29,400, recording an increase of 1.49% on the day, as well as a 4.05% gain across the previous week, adding up to the 7.73% growth on its monthly chart, according to the data retrieved by Finbold on April 28.

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