The names of up to nine million FTX customers are set to remain confidential for at least three more months following the latest ruling in FTX bankruptcy proceedings.
The decision was reportedly made by Judge John Dorsey in the Delaware-based bankruptcy court on Jan. 11 in response to a 168-page filing by FTX on Jan. 8 which requested the court to withhold confidential customer information.
Judge Dorsey said that he remains “reluctant at this point” to disclose the confidential information, as it may put creditors “at risk,” despite increased pressure from several media outlets:
“We’re talking about individuals here who are not present – individuals who may be at risk if their name and information is disclosed.”
Days earlier, FTX lawyers argued “that disclosure of the information would create an undue risk of identity theft or unlawful injury to the individual or the individual’s property” and that the court should use its “broad discretion” under the U.S. Bankruptcy Code to protect those affected by the FTX collapse.
In late December, a group of non-U.S. FTX customers also pushed the Delaware bankruptcy court to privatize customer information in a Dec. 28 joinder filing, arguing that public disclosure would cause “irreparable harm.”
Judge Dorsey’s decision does however run contrary to most bankruptcy proceedings where creditor information is disclosed — which is what happened in cryptocurrency lender Celsius’ bankruptcy proceedings in Oct. 2022.
The Delaware-based bankruptcy court hasn’t been as kind to FTX equity holders, having released a Jan. 9 document disclosing the investors expected to be wiped out and the number of shares they held with FTX.
Among those included NFL legend and former FTX brand ambassador Tom Brady, his ex-wife Gisele Bündchen, tech entrepreneur Peter Thiel and Shark Tank investor Kevin O’Leary.
It appears that progress is being made though, with FTX reported to have already recovered $5 billion in cash and cryptocurrency, according to FTX attorney Andy Dietderich in a Jan. 11 statement.
According to early bankruptcy filings in November, more than 1 million creditors were speculated to be involved, with $3 billion being owed to the 50 largest creditors alone.