FTX To Maintain Privacy of Its Creditors

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In the FTX bankruptcy case, a federal judge granted a preliminary request to keep the identity of creditors private but added that additional information regarding the creditors of the company might soon become public.

“On an interim basis, I’ll enter the order allowing for the redaction of the names and addresses,” said Judge John Dorsey of the U.S. Bankruptcy Court, District of Delaware. “Everyone in the room knows the internet is wrought with potential dangers.”

A spokesperson for the U.S. Trustee, an office within the Justice Department in charge of managing bankruptcy cases, argued in favor of providing more information than is currently available on the companies to which FTX or its related entities are indebted.

“We oppose the redaction of the names and addresses of customers who are not individuals,” said Benjamin Hackman, an attorney with the office. “There should be transparency about who those entities are, especially on the top 50 list.”

Although disclosing creditor information to the public is customary in U.S. bankruptcy cases, Celsius creditors were miffed when it happened there.

Attorneys for FTX and the other businesses that are part of its corporate family argued in favor of keeping as much information redacted as is practical. In addition to privacy issues, the company wanted to protect the privacy of that information because it sees its customer list as a valuable asset.

“The debtors’ customer list, numbering in the millions, is an asset of the estate,” argued Brian Glueckstein, a partner with Sullivan and Cromwell, which is representing FTX in the bankruptcy proceedings. “Public release of the customer list would give the debtors’ competitors a free opportunity to poach the debtors’ customers and would interfere with the ability to sell assets and maximize value as these cases progress,” he continued.

Glueckstein also argued that “there are significant privacy concerns raised by the disclosure of this protected creditor information. The debtors’ customer base is global. Those customers who reside in the United Kingdom and the European Union member countries have additional data privacy protections under local law.”

The U.S. Trustee will continue to have confidential access to that information despite the judge’s interim order keeping creditor information redacted. The matter will likely be discussed again next month. 

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