FTX, a bankrupt cryptocurrency exchange, has been given the authorization to exclude individual customers from any court documents in its bankruptcy proceedings. At the same time, the identities of companies and institutional investors will be kept confidential for an additional 90 days.
In recent times, mainstream media outlets have advocated for the release of the list of FTX customers, asserting that the press and public have a “presumptive right of access” to bankruptcy filings.
FTX has, however, continually opposed these demands, claiming that revealing the identities could potentially decrease the worth of the crypto exchange if the information was made public.
As per a Reuters article dated June 9th, individual names will now be kept confidential and not available to the public.
Judge John Dorsey from the Delaware-based bankruptcy court reportedly decided on June 9 to safeguard the welfare of those involved. He declared:
Companies and institutional investors on FTX’s customer list will only be removed on a temporary basis. It is said that FTX must make a new request within 90 days to keep those names confidential.
It was made clear that even though companies and institutional investors are not exposed to the same dangers as individuals, their names could still possess considerable worth if FTX were to market the exchange or client list individually.
“Dorsey emphasized that customers are the most crucial factor in this situation,”
The bankruptcy judge overseeing FTX has approved the sale of LedgerX.
At a court hearing on June 8, Kevin Cofsky, a partner at the investment bank Parella Weinberg and a member of the FTX restructuring team, contended that revealing customer names “would be detrimental” to the restructuring process.
Cofsky contended that making the data public would hinder the debtor’s potential to maximize the worth which they currently possess.
He stated that even if the exchange wasn’t sold, creditors would have the chance to receive a part of the trading fees if FTX was to be relaunched.
In December 2022, a group of non-U.S FTX customers argued that making their names public would cause irreparable damage and further victimize those whose assets had been misappropriated.
On May 4, Bloomberg, Dow Jones, The New York Times and the Financial Times voiced a second protest against revealing the identities of their clients, claiming that such revelation would not put creditors in an “unacceptable danger”.
Can crypto exchanges be trusted after the failure of FTX?
Subscribe to our email newsletter to get the latest posts delivered right to your email.