This article is compiled and organized by BlockWeeks
Mt. Gox Moves Cold Wallet BTC for the First Time in Five Years, Repayment Countdown Begins
On May 27 (Tuesday), Mt. Gox moved BTC from its cold wallet for the first time in five years. The bankrupt, Tokyo-based Bitcoin exchange transferred all 141,868 BTC (approximately $9.7 billion) to a brand-new 1Jbez…APs6 address, which was subsequently emptied and split equally into three other addresses managed by the Mt. Gox rehabilitation trustee.
After the assets moved, the Mt. Gox trustee issued a statement saying: "The rehabilitation trustee is currently managing Bitcoin and Bitcoin Cash in a secure manner. As the rehabilitation trustee is proceeding with the preparations for the aforementioned repayments, please wait patiently until the repayments are completed." The statement suggests that repaying creditors will be the next step in the Mt. Gox bankruptcy proceedings. Notably, the trustee did not disclose a specific timetable for the repayment distribution.
After suffering a series of hacks and losing nearly 950,000 BTC, Mt. Gox declared bankruptcy in Japan in February 2014. Over the following approximately 10 years, about 15% of the BTC lost by customers was recovered, namely 141,768 BTC (approximately $9.7 billion at current BTC prices). The trustee responsible for the Japanese Mt. Gox bankruptcy proceedings is expected to deliver the recovered BTC to approximately 20,000 creditors.
In the bankruptcy proceedings, Mt. Gox offered creditors three options: first, receive approximately 90% compensation now; second, wait possibly as long as 3 to 5 years for full compensation; third, receive compensation in cash without a discount, but face unknown further delays. Galaxy Research estimates that about 75% of recovered BTC creditors chose "to receive a discounted compensation in kind early."
As repayment to creditors in the Mt. Gox bankruptcy proceedings finally approaches, the entire crypto market is speculating: what proportion of the distributed tokens will be sold after creditors receive them, and how this selling pressure will affect BTC and BCH prices. Although the market has limited understanding of the complexity of the Japanese bankruptcy proceedings, the market's initial reaction to recent Mt. Gox developments appears to have overestimated the scale of selling pressure from creditors.
Galaxy's Assessment: Actual Selling Pressure May Be Only 65,000 BTC
Although the market may expect 142,000 BTC to flood the market this year, Galaxy Research believes the actual number will be significantly smaller: 65,000 BTC will be delivered to individual creditors, and another 30,000 BTC will be delivered to claim funds and a separate bankruptcy case. Furthermore, there is reason to assume that most of the BTC received by funds that acquired claims from creditors will be distributed in kind to LPs rather than sold. Therefore, the initial selling pressure may come from individual creditors (65,000 BTC).
Although the potential selling pressure of 65,000 BTC is considerable, Alex Thorn, head of firmwide research at Galaxy, pointed out in a private research report that the 20,000 creditors belonging to this pool of 65,000 BTC are early Bitcoin adopters who have historically tended to hold for the long term (11% of BTC supply has not moved in over 5 years). Presumably, the vast majority of these 20,000 creditors who bought BTC at $451 or less are ideologically more supportive of Bitcoin than today's broader holder base. These early Bitcoin advocates have resisted attractive and aggressive offers from claims buyers over the past 10 years across multiple bear markets, suggesting these early Bitcoin adopters want their coins back. Additionally, capital gains tax consequences may further dampen selling, as these creditors' investments have at least a 1,400% unrealized gain in USD terms. The bankruptcy trustee must complete the first distribution by October 31. Although these on-chain movements seem to indicate that repayment may happen soon, whether payment is imminent remains uncertain. However, after nearly 10 years of insolvency, creditors are finally about to get back some tokens.
PayPal's PYUSD Lands on Solana
PayPal's PYUSD stablecoin expands to Solana. At the Consensus 2024 conference, PayPal announced that its PayPal USD (PYUSD) stablecoin is now live on Solana, making it the second blockchain for the Paxos-issued stablecoin after Ethereum. According to PayPal's press release, Solana was chosen for its "proven cost-effectiveness and high throughput." PayPal noted that Solana is the most-used blockchain for stablecoin transfers (according to Artemis data), adding that "Solana has become the dominant blockchain for running tokenized transactions, making it ideal for PYUSD as it continues to be used in payment scenarios."
Additionally, in a longer blog post, PayPal pointed out that other factors contributed to the choice of Solana for PYUSD expansion, namely Solana's token extensions feature, which brings "familiar fintech features" to stablecoin payments, including private transfers, transfer hooks (similar to plugins for commercial payments), and memo fields for friendlier record-keeping.
For users, regardless of the blockchain, PYUSD will appear as a unified balance in PayPal and Venmo wallets. In addition to PayPal and Venmo wallets, interested users can also purchase PYUSD on Solana through Crypto.com, Phantom wallet, and Paxos.
PYUSD reaches over 100 million PayPal and Venmo users in the U.S., and PayPal's expansion to Solana significantly enhances PYUSD's usability in payment and commerce scenarios. As Galaxy highlighted in its "Crypto Use Cases" report, Solana Pay enables users to pay merchants in USDC, whether at physical points of sale or online checkout, with near-instant confirmation and extremely low fees (Solana transactions typically confirm in about 0.5 seconds, with average network fees of about $0.0005). However, PYUSD's expansion to Solana was long anticipated—in December 2023, Paxos, the issuer of PYUSD and regulated by the New York State Department of Financial Services (NYDFS), had already received regulatory approval to expand to Solana, whereas PYUSD had previously been limited to Ethereum.
The more interesting part of this announcement is the other features enabled by Solana token extensions, which bring greater programmability. For example: (1) Private transfers enable merchants to keep transaction amounts confidential (e.g., not having to share sensitive sales data), which can attract more merchants to move their businesses fully on-chain; (2) Transfer hooks can approve or reject a transfer based on compliance or authorization checks, among many other features; (3) Memo fields provide an important social element, which is crucial for the growth and adoption of P2P crypto transfers (as evidenced by Venmo's explosive growth and popularity when it first launched). Combining these new utilities with a fintech approach that simplifies and abstracts away complexity for users, PayPal and Solana will play an important role in unlocking frictionless payments and driving mass adoption.
Mastercard Brings "Credentials" into the Crypto World
Mastercard Crypto Credential launches, aiming to facilitate P2P crypto transfers. Also at the Consensus conference, Mastercard announced that its Crypto Credential network is now live for cross-border and domestic transfers. Instead of relying on long and complex blockchain addresses, users can... (This system is not a completely new concept—many projects have attempted to solve the problem of long and complex crypto addresses, such as the Ethereum Name Service ENS, which supports custom domain names).
However, Mastercard's solution is compliance-centric, providing a common verification standard for partner exchanges when conducting KYC processes and verifying user identities. Mastercard's platform verifies that both the sender and receiver are valid and confirms that the receiving wallet for the transaction supports the specific crypto asset and network chosen by the sender (otherwise the sender will be notified and the transaction will not proceed).
If it wasn't obvious before, it should be clear now: traditional financial giants are seeking to participate in the development of the crypto space. This is both a signal of increasing adoption and may raise some centralization concerns. However, in this case, the application of Mastercard Crypto Credential is currently limited to transfers between partner centralized exchanges and does not touch the more attractive crypto use case—using Web3-based credentials for identity/verification, which also leaves room for growth for crypto-native projects like the Ethereum Name Service (ENS).
Other Developments: Ethereum Blob Fees Soar, Taiko Contributes Nearly 70%
The daily Blob fees paid by Ethereum's execution layer (Layer 1) have reached their highest point since the blobscription frenzy in late March/early April. In the three days ending May 30, 2024, the fees paid were 81.1 ETH, the fourth-highest amount in that window (excluding the first three days after Ethereum Blob launch). The surge in fee payments can be attributed to Taiko—a recently launched Ethereum based rollup, which began submitting Blobs on March 27, 2024. Of the 81.1 ETH in execution layer Blob fees, 54.29 ETH (66.94%) was paid by Taiko. This surge pushed the cumulative USD value of execution layer Blob fees past $2.75 million (including $2.58 million in base fees and $178,000 in priority fees).
In addition, other noteworthy developments this week include: Pudgy Penguins will release a mobile game in 2025; SEC Commissioner Hester Peirce proposed establishing a US-UK crypto regulatory "cross-border" sandbox; Galxe will release the Alpha mainnet of Layer 1; two BlackRock funds included the company's IBIT spot Bitcoin ETF in their investment portfolios in the first quarter; Ethereum Name Service (ENS) proposed migrating to Layer 2; with the approval of the SIMD-0096 proposal, Solana validators will receive full priority fees; Ethereum plans to launch the Pectra upgrade in the first quarter of 2025, following Dencun.
