The release of the names of bankrupt crypto exchange FTX’s 9 million customers could hurt a “potential fresh start” for the company, lawyers for the creditors’ committee argued on Wednesday.
It’s the latest development in one ongoing dispute on whether the names of FTX’s creditors should be made available to the public. Aside from privacy concerns, the creditors’ committee’s lawyers are now arguing that revealing these names could further damage the company’s value and, by extension, creditors.
“There have been a great many retail investors here and so there is inherent value in these lists and that is undeniable – I think everyone agrees with that,” said Kris Hansen, a partner at Paul Hastings, an attorney representing the creditors’ committee, during a court hearing in Delaware.
“To weigh that up, we looked at it and said we have two main responsibilities here,” said Hansen. “One is to assess the value associated with those assets from a sell perspective, and assess the value associated with those assets for a potential restart, that’s what we’ve referred to on our site. Rebooting is complicated,” he said.
Hastings’ reference to the “value” of the list has to do with one of the arguments FTX makes against the publication of identifying information about its customers, even under seals. FTX’s restructuring team has asked for the judge’s permission to keep the list fully private for the next six months, which would give the company time to market the list to buyers as a salable asset.
At the end of the hearing, US Bankruptcy Judge John Dorsey ruled to allow FTX to withhold the names of customers for three months. “I am interested in protecting the identity of these individuals,” Dorsey said.
Publishing the names of FTX customers, or when to do so, has been a hotly debated topic for the past month.
FTX’s lawyers also argued that the company’s privacy would be violated if their information was disclosed. And there is a recent precedent for that.
Celsius, which is in its own bankruptcy proceedings, shared names, crypto wallet IDs, transaction types and amounts, what services customers have used, and the types and amounts of tokens held by customers, in a 14,500-page court filing in October. The data leak caused a lot of backlash on social media.
The FTX bankruptcy case was originally co-transmitted from the Bahamas Creditor names redacted. But Judge John Dorsey, who is overseeing the trial, allowed David Finger, an attorney representing media outlets, to do so an argument for releasing the names from FTX customers.
FTX’s legal team suggested that releasing names could put these customers at risk of personal harm, including kidnapping. US Trustee Juliet Sakessian was skeptical.
“Kidnapping? With a name,” she said. “We don’t even know what country these people live in.”
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