First Hearing Held in FTX Case: Judge Received Decision on Creditors

FTX creditors who are concerned that their names and other personal information will be exposed as part of the crypto exchange’s bankruptcy proceedings can, at least temporarily, breathe a sigh of relief.

Judge Orders Withholding Information Of Creditors From FTX

Delaware District Court Judge John T. Dorsey provisionally approved a motion allowing FTX to censor information, including names and addresses on its payee list, at a hearing on Tuesday.

The US Office of Trustees, the wing of the Department of Justice (DOJ) responsible for overseeing bankruptcy proceedings, opposed some of the request, arguing that transparency is a necessary part of the process.

Lawyers for Sullivan & Cromwell, the law firm that represents FTX, countered, arguing that it is important to protect FTX’s clients from inadvertent disclosure as investors. They also claimed that FTX’s client list is one of the firm’s most valuable assets and therefore should be protected from competing exchanges.

Lawyers representing a group of unsecured creditors of FTX cryptocurrency They supported FTX’s claim, arguing that participation in its ecosystem are key factors and that disclosing customer information could “deter participation” in the bankruptcy process and “impair creditors’ ability to get out of this lawsuit, which of course would be against their interests.”

Judge Dorsey explained the decision to withhold the information as follows:

“I need to make sure I protect the interests of these people.

This is a place where everything is done online. And everyone in this room knows that the internet is full of potential dangers. Hacker attacks happen, people’s accounts are hacked. And I think it’s important that we protect individuals who want to participate in the bankruptcy process.”

*Not investment advice.