As it seeks to recover money lost in what was apparently a massive fraud, cryptocurrency exchange FTX will petition a U.S. bankruptcy court on Wednesday for permission to keep client names private for at least six months and also to auction off parts of its assets. FTX will petition U.S. Bankruptcy Judge John Dorsey in Delaware to authorize the procedures for selling affiliates LedgerX, Embed, FTX Japan, and FTX Europe as a way of generating funds for consumers, who have reportedly lost billions of dollars due to the abrupt collapse last year.
Client Names Under Wraps
In response to objections raised by leading media organizations, FTX has requested that its customer names be kept confidential for a period of at least six months. The now-defunct exchange has indicated that it may seek additional extensions, although this will be subject to assessment by the court.
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The business has contended that standard bankruptcy regulations, which call for disclosing information about creditors — among them, as many as 9.5 million clients—could expose them to fraud, breach their privacy, and give competitors access, eroding FTX’s worth as it looks for potential buyers.
FTX Seeks Auctioning Assets
In addition, according to court records made by FTX, the four firms that FTX seeks to sell are relatively independent of the larger FTX conglomerate. Furthermore, each entity has its own distinct customer accounts as well as management teams, devoid of any connections or links to the Bankman-Fried led core team.
The Bahamas-based centralized exchange has received scores of unsolicited proposals, but it has not committed to selling any of the companies. Since FTX has plans for scheduling auctions for the months of February and March, they anticipate a rise in bids during that time. However, the United States Trustee, which is a bankruptcy watchdog under the Department of Justice, is opposed to selling the affiliates before a comprehensive investigation can be conducted.
Sam Bankman-Fried, the 30-year-old crypto mogul, was indicted on two counts of wire fraud and six counts of conspiracy in a Manhattan federal court last month. The accusations allege that Bankman-Fried stole customer deposits to pay debts from Alameda Research. Currently, he is maintaining his innocence at the federal court by pleading not guilty.
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