NEW YORK - Bankrupt crypto exchange FTX received court permission on Friday to remove customer names from all filings in its bankruptcy case, persuading a U.S. judge that publishing the names would put people at risk of scams and identity theft.
U.S. Bankruptcy Judge John Dorsey in Wilmington, Delaware, ruled that FTX can permanently redact the names of individual customers from its bankruptcy filings, after hearing testimony that publishing customers' names would place them at risk even if other identifying information like their email address was kept secret.
"It is the customers who are the most important issue in this case," Dorsey said. "We want to make sure that they are protected and they don't fall victim to any types of scams."
In January, Dorsey had allowed FTX to keep secret the names of 9 million of its individual customers for three months.
On Friday, Dorsey also authorized FTX to remove the names of companies and institutional investors from its customer lists on a temporary basis, saying FTX will have to make a new request in 90 days. Dorsey said those customers do not face the same risks as individuals, but their names could be valuable property if FTX decides to sell its crypto exchange business as a whole or sell its customer list separately.
Dorsey also addressed a longstanding dispute between FTX's U.S. bankruptcy team and liquidators overseeing the wind-down of FTX's Bahamian affiliate FTX Digital Markets, ordering the two sides to find a mediator and try to avoid inconsistent rulings in the separate court proceedings in the U.S. and Bahamas.
Dorsey denied the Bahamian liquidators' request to begin litigation in Bahamas courts over assets held by the U.S. debtors. The judge said on Thursday that he would not defer to a Bahamian court's ruling on which FTX company should control assets and take up responsibility for repaying customers, and he said on Friday that he would not expect a Bahamian court to follow his orders, either.
The whole situation cries out for more cooperation, Dorsey said, adding that he had been "lying in bed at 3 a.m. trying to figure out what to do with this mess."
The Bahamian insolvency case began one day before FTX Trading and more than 100 affiliates in November filed for bankruptcy protection in Delaware to address claims that the company misused and lost billions of dollars worth of customers' crypto deposits.
FTX founder Sam Bankman-Fried and several company insiders have been indicted on fraud charges for their role in the company's collapse. Bankman-Fried is fighting the charges. Several other insiders have pleaded guilty and agreed to cooperate with prosecutors.
(Reporting by Dietrich Knauth, Editing by Alexia Garamfalvi and Rosalba O'Brien)