FTX Bankruptcy: Names Of Customers Will Not Be Revealed In Filings

FTX has been authorised to temporarily remove the names of companies and institutional investors from its customer lists.

FTX founder Sam Bankman-Fried and several insiders have been indicted on fraud charges.

Source : Getty

FTX, a bankrupt cryptocurrency exchange, has obtained court approval to remove customer names from all bankruptcy filings, with the aim of safeguarding individuals from potential scams and identity theft. US Bankruptcy Judge John Dorsey, based in Wilmington, Delaware, ruled in favor of FTX's request to permanently redact the names of individual customers from the filings. Testimony provided during the hearing emphasised the risks associated with publishing customers' names, even if other identifying details were kept confidential, prompting Judge Dorsey's decision.

Dorsey stressed the importance of protecting customers, stating, "It is the customers who are the most important issue in this case. We want to make sure that they are protected and they don't fall victim to any types of scams." In January, the judge had initially granted FTX permission to withhold the names of its 9 million individual customers for a three-month period.

Furthermore, Dorsey authorised FTX to temporarily remove the names of companies and institutional investors from its customer lists. However, he stipulated that a new request would need to be made in 90 days. The judge acknowledged that these customers faced lower risks compared to individuals but acknowledged that their names could hold value if FTX decides to sell its cryptocurrency exchange business or its customer list separately.

Judge Dorsey also addressed a longstanding dispute between FTX's US bankruptcy team and liquidators overseeing the wind-down of FTX's Bahamian affiliate, FTX Digital Markets. He ordered both parties to engage a mediator and work towards avoiding inconsistent rulings in the separate court proceedings in the United States and the Bahamas.

Regarding the Bahamian liquidators' request to initiate litigation in Bahamas courts concerning assets held by the US debtors, Dorsey denied their appeal. The judge stated that he would not defer to a Bahamian court's ruling regarding which FTX entity should control assets or take responsibility for repaying customers. He also expressed doubts that a Bahamian court would comply with his orders.

Judge Dorsey called for increased cooperation among the parties involved, expressing his concern over the complex nature of the situation. He remarked, "The whole situation cries out for more cooperation. I have been lying in bed at 3 am trying to figure out what to do with this mess."

The Bahamian insolvency case commenced one day prior to FTX Trading and over 100 affiliates filing for bankruptcy protection in Delaware in November. The goal of the bankruptcy filing is to address allegations of misusing and losing billions of dollars' worth of customers' cryptocurrency deposits. FTX founder Sam Bankman-Fried and several insiders have been indicted on fraud charges related to the collapse of the company. Bankman-Fried is currently contesting these charges, while others have pleaded guilty and agreed to cooperate with prosecutors.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.