The judge argued that unveiling the names of FTX customers could expose them to various threats, including scams.
FTX, the bankrupt cryptocurrency exchange, has allegedly obtained the legal right to permanently conceal its customers' identities from all court documents while corporate and institutional investors' names are temporarily withheld.
According to the June 9th report by Reuters, in the ruling, the judge at the United States Bankruptcy Court for the District of Delaware, John Dorsey, cited customer safety as the main reason for making such a decision.
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In the ruling, the judge highlighted that the primary concern, in this case, was the well-being of individual customers, with a statement saying:
We want to make sure that they are protected and they don’t fall victim to any scams.
Dorsey agreed with the potential threats of scams and identity theft that could harm individual customers if their identities were revealed. However, the judge did not foresee the same risk for companies and institutional investors.
The judge's ruling allowed to temporarily withhold the names of these entities from the list. FTX will have a chance to renew the request every 90 days to maintain the secrecy of those identities.
The initial rumblings started when several well-known news organizations sought to access FTX's client list, pushing the narrative that there's a public and journalistic entitlement to view bankruptcy filings.
FTX took a strong stand against this, contending that releasing such sensitive data could place their customers in jeopardy and possibly affect the sale worth of the crypto exchange itself.
Kevin Cofsky, a member of the FTX restructuring team and partner at investment bank Parella Weinberg, argued in a court hearing on June 8th that revealing the customer names would be damaging to the restructuring efforts. Cofsky took it further, suggesting that revealing this data would hamper the debtor's capacity to capitalize on its value.
FTX's victory underscores the complex intersection of privacy and transparency within the evolving crypto landscape.
