Bitcoin’s Latest Rub: Overhang Ghost From Mt. Gox Bankruptcy

Bitcoin investors seething over a clampdown on Japanese cryptocurrency exchanges and renewed regulatory scrutiny of trading venues in the U.S. now have bigger fish to fry as they assign blame for the recent price decline.

They’re citing the attorney Nobuaki Kobayashi, known as the Tokyo “whale,” for helping to push Bitcoin below $10,000 this week, when news emerged that in his role as bankruptcy trustee he has been liquidating cryptocurrencies on behalf of creditors in the now-defunct Mt. Gox crypto exchange.

“Now *this* has been causing a headwind for Bitcoin recently,” said Alistair Milne, a self-described “Bitcoin evangelist,” on Twitter, referring to Kobayashi’s disclosure that he’s sold about $400 million of Bitcoin and Bitcoin Cash since late September. Both are down about 19 percent from Monday.

On the online message board Reddit, users urged each other to contact the trustee to complain about the sales. Kobayashi has said he tried to get “as high a price as possible” as he sold off some of the considerable Bitcoin hoard left behind when Mt. Gox collapsed four years ago. He also said he’s studying further sales of the $1.8 billion remaining — an overhang that can depress prices.

The trustee’s disclosure was cited by eToro Ltd.’s head cryptotrader as a driver for this week’s selloff in the world’s largest digital token.

The outrage may be misplaced, however. Rather than exerting downward pressure on prices through his Bitcoin sales from late September, Kobayashi also likely sold into a climbing market as the digital token reached its December peak. He is also required to compensate Japanese creditors in yen.

Bitcoin fell 6.3 percent to $9,318 at 12:02 p.m. in New York. Bitcoin Cash, an offshoot of the main coin, dropped 6.1 percent to $1,021.

— With assistance by Tracy Alloway

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