Delaware Judge Rules FTX Creditor List to Stay Sealed for Now

• A Delaware bankruptcy judge ruled on Wednesday that the list of creditors for FTX could remain sealed for at least three months.
• The decision was made to protect potentially 9 million users of the crypto exchange from having their privacy jeopardized by their names being published.
• The judge indicated that he may change his mind during a future hearing.

A Delaware bankruptcy judge ruled on Wednesday that the list of creditors for FTX, a crypto exchange owned by Sam Bankman-Fried’s empire, could remain sealed for at least three months. The decision was made to protect potentially 9 million users of the exchange from having their privacy jeopardized by their names being published. Media organizations and the U.S. government had argued for the legal process to remain transparent, but the judge indicated that he may change his mind during a future hearing.

Judge John Dorsey, overseeing the winding up of FTX, shot down the bid for transparency, but stated that he would review the issue after three months. At the hearing, Brian Glueckstein, an attorney at Sullivan & Cromwell representing FTX, asserted that “sensitive personal information of customers and other stakeholders” and “the value in the debtors customer list as an asset” should be redacted and protected.

The court acknowledged that publishing the names of customers could have serious implications on their privacy. “I’m reluctant at this point to say I’m going to require the disclosure,” stated the judge. “We’re talking about individuals here who are not present – individuals who may be at risk if their name and information is disclosed.”

FTX CEO John J. Ray III argued that the names should remain sealed temporarily to allow the company to protect the identities of its customers. He suggested that FTX could reveal the names of creditors after the court has allowed the company to redact any sensitive information from the documents.

Ultimately, the judge decided to overrule the objections and allow the creditor lists to remain sealed for the time being, noting that the issue would be reviewed later. The ruling provides FTX with some breathing room, but the issue of transparency is likely to come up again in the near future.