Bankrupt Crypto Exchange FTX's Individual Customer Names to be Kept Secret

ankrupt crypto exchange FTX received court permission to remove customer names from all of its filings related to the bankruptcy case on June 9, local time, after FTX convinced a judge that releasing the names would expose people to the risk of fraud and identity theft.

After hearing testimony, U.S. Bankruptcy Judge John Dorsey in Wilmington, Delaware, ruled that FTX could permanently redact the names of individual clients in its bankruptcy filings. Since even if other identifying information, such as the e-mail addresses, are kept confidential, releasing the names could put the customer at risk.

"It is the customers who are the most important issue in this case," Dorsey said. "We want to make sure that they are protected and they don't fall victim to any types of scams."

In January, Dorsey had allowed FTX to keep secret the names of nine million individual customers for three months.

On Friday, the judge authorized FTX to temporarily remove the names of companies and institutional investors and said FTX would need to submit a new request within 90 days. He also said those customers would not face the same risks as individual customers, but that the names of companies and institutions would become valuable property if FTX decides to sell its crypto exchange business as a whole, or sell its customer list separately.

Dorsey also resolved a long-standing dispute between FTX's U.S. bankruptcy team and the liquidators overseeing the liquidation of FTX's Bahamian subsidiary, FTX Digital Markets Marketplace, by ordering the parties to seek a mediator to avoid inconsistent rulings in separate court proceedings in the U.S. and Bahamas.

Dorsey denied the Bahamian liquidators' request to litigate in Bahamian courts over assets held by U.S. debtors. The judge said he would not defer to the Bahamian court's ruling on which FTX company should control the assets and be liable for repayment, nor did he expect the Bahamian court to follow his order.

The judge said the whole situation needed more cooperation and that he was "lying in bed at 3 a.m. trying to figure out what to do with this mess."

FTX founder Sam Bankman-Fried and several company insiders are now charged with fraud. Bankman-Fried has pleaded not guilty and is under investigation by the relevant agencies.

(Source: Reuters)