FTX authorized to ‘permanently redact’ customer names from all bankruptcy filings

Bankrupt cryptocurrency exchange FTX has been granted permission to remove individual customers from all court filings in its bankruptcy case. Meanwhile, the names of companies and institutional investors will be sealed for the next 90 days.

In recent days, mainstream media outlets have pushed for access to the list of FTX clients, arguing that the press and public have a “presumptive right of access to bankruptcy filings”.

However, FTX has consistently objected to these requests, arguing that the disclosure of the names could potentially reduce the sale price of the crypto exchange if made public.

According The names of the individuals will now be permanently sealed from the public, according to a June 9 Reuters report.

The decision to “permanently redact” the names of individual customers was made on June 9 by Judge John Dorsey in a Delaware-based bankruptcy court in an effort to protect the safety of individuals, whom he said were “the most important issues in this in this matter.”

“We want to make sure that they are safe, and that they are not the victims of any scams.”

However, companies and institutional investors included in the client list will be removed only on a “temporary basis”. FTX was told to make a new request within 90 days to maintain the confidentiality of those names.

It was clarified that although corporate and institutional investors do not face the same risks as individuals, their names may hold significant value if FTX sells the exchange or client list separately.

Connected: FTX Bankruptcy Judge Approves Sale of LedgerX

Kevin Kofsky, a partner at investment bank Parella Weinberg and a member of the FTX reorganization team, argued in a court hearing on June 8 that releasing the names of clients “would be detrimental” to the restructuring efforts.

Investment banker Kevin Kofsky, FTX 2.0 advocate. pic.twitter.com/nvGU9WTM6P

— FTX 2.0 Alliance (@AFTXcreditor) June 9, 2023

Kofsky further argued that releasing the information “would impair the debtor’s ability to maximize the value of what he currently has.”

He added that even if the exchange was not sold, if FTX were to be relaunched, creditors would have the opportunity to collect a portion of the trading fees.

In December 2022 it was argued by a group of non-US FTX customers that disclosing the names of customers to the general public “would cause irreparable harm, further victimizing” customers “whose assets were misappropriated.”

On 4 May, Bloomberg, Dow Jones, The New York Times and the Financial Times raised a second objection to sealing the identities of their clients, arguing that such disclosure would not pose “undue risk” to creditors.

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