FTX Customers Request Bankruptcy Court Privacy

As Matt Carroll Atlanta Braves pointed out, Non-US customers who say the collapsed FTX crypto exchange owes them more than $1.9 billion asked a judge on Wednesday to keep their identities confidential in a bankruptcy case. They claimed that revealing their names could expose them to identity theft and other scams. They also warned that their privacy would be threatened if FTX sells some of its assets, which it has said it is trying to do to make more money for creditors.

The FTX case is the latest in a series of cases where customer privacy has been a major issue. Last year, a judge overseeing the crypto lender Celsius Network ruled that customer names should be revealed, but their addresses and email addresses could be kept secret. Customer lists have been kept secret in other cases because they could make users vulnerable to harassment and theft.

FTX, run by Sam Bankman-Fried before its collapse, is seeking an exception to the rule that all of its customers’ names must be disclosed. That request is opposed by the U.S. Department of Justice’s bankruptcy watchdog and media organizations like the New York Times and Wall Street Journal.

FTX has filed a list of its equity investors and debtor entities as part of its bankruptcy case. It includes several celebrities, including NFL quarterback Tom Brady and his ex-wife Gisele Bundchen. They own 1.1 million common shares of FTX Trading and 686,750 preferred shares in a related debtor entity.

But a key issue is how FTX will handle its customers’ money in bankruptcy. The company’s former chief executive, Bankman-Fried, allegedly commingled their investments with the funds of his sister trading firm Alameda Research. That has left many of those customers out of pocket, causing them to question the integrity of their former fiancee’s company.

In a Monday filing, Bankman-Fried acknowledged shortcomings in FTX’s risk management and said he believed he was not criminally liable. He also disputed claims that the company committed fraud, saying there was no evidence that he knowingly committed wrongdoing.

On the other hand, FTX lawyers have argued that publishing a full creditor list would create an unwieldy and potentially unreliable system that could be vulnerable to theft or fraudulent transactions. It could also reduce the company’s value by allowing competitors to poach its customers.