A US judge monitoring the bankruptcy of FTX announced on Friday that he would permit media companies to intervene in the case to argue that the defunct cryptocurrency exchange must divulge the names of its users.
US Bankruptcy Judge John Dorsey said he would permit the New York Times, Dow Jones, Bloomberg, and Financial Times to intervene in the case, but he postponed until a hearing on January 11 arguments on ordering FTX to divulge customer identities.
The media businesses warned in a Delaware bankruptcy court filing that keeping customer names private may transform bankruptcy proceedings into a “farce” if creditors start arguing anonymously over how much money they should receive.
FTX has stated that the standard US bankruptcy practice of releasing the names, addresses, and email addresses of creditors, which includes consumers, could expose them to fraud and breach European privacy rules.
Additionally, the business has stated that exposing the identities of up to one million clients would make it simpler for a competitor to recruit them, so diminishing the value of FTX’s platform when it seeks purchasers.
The US Trustee, a division of the Department of Justice, has already objected to FTX’s request and argued that bankruptcy cases benefit from greater transparency.
Attorneys for FTX also stated during the hearing that they had made “substantial progress” in retrieving assets, and an attorney for a member of the newly formed creditors committee informed the court that the committee will choose a legal team to represent them next week.
The bankruptcy hearing on Friday concludes a rollercoaster week for the cryptocurrency exchange. On Monday, founder Sam Bankman-Fried was arrested on fraud charges, on Tuesday, FTX CEO John Ray testified before Congress, and on Wednesday, FTX challenged the demand of Bahamas-based liquidators for access to its systems and documents.