A US court permitted now-bankrupt crypto exchange FTX to permanently remove individual customer names from all bankruptcy filings to avoid scams and identity theft risks.

Protecting FTX Customers from Scams

«It is the customers who are the most important issue in this case,» US Bankruptcy Judge John Dorsey in Wilmington, Delaware, stated. «We want to make sure that they are protected and they don’t fall victim to any types of scams.»

Though the judge permitted a permanent removal of individual customer names of FTX, the permission to remove the names of companies and institutional investors from its customer lists was provided on a temporary basis. FTX need to make a new request in 90 days to keep those customer names a secret.

According to Judge Dorsey, institutional customers do not face the same risk as individuals, and their names could be valuable if FTX decides to sell its entire business or even the customer list.

FTX, which filed for bankruptcy last November, received the court’s permission to keep the names of its 9 million individual customers private for three months in January. FTX argued that even the names of these customers, without emails, in the public domain might put them at risk.

In April, four media houses, Bloomberg, The Financial Times, The New York Times, and its parent business, the Dow Jones & Company, filed a joint complaint seeking the revelation of FTX’s non-US customer names, arguing that the public and press have «presumptive right of access to bankruptcy filings.»

The media houses also argued that «sealing customers’ names would be routine in virtually every bankruptcy proceeding» if the court allows a «permanent sealing» of the names as requested by FTX.

Media group files objection to redacting FTX customer names.

If the objection succeeds, the names of up to 1.4 million customers and their FTX balances would be made public. pic.twitter.com/w0avsJ6JYv

— FTX 2.0 Coalition (@AFTXcreditor) April 5, 2023

Appeal to Find an Out-of-Court Mediator

The US judge also addressed the dispute between FTX’s US bankruptcy team and liquidators of FTX’s Bahamian affiliate FTX Digital Markets, ordering them to find a mediator to avoid inconsistent rulings in the US and Bahamas. The two administrators are fighting over who will control the assets of the collapsed exchange.

His suggestion came after he denied the Bahamian liquidators’ request to begin litigation over assets held by the US debtors in Bahamas courts. While he clarified that the US court would not defer to the Bahamas court, he would not expect a Bahamian court to follow his orders.

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