Jeremy Sheridan, former deputy director of the US Secret Service’s Office of Investigations, has warned that certain FTX clients could be targeted if their personal details were made public.
In a statement filed April 20 with the US Bankruptcy Court for the District of Delaware, Sheridan seconded a motion by the debtors that it would withhold “certain confidential information” from FTX users. According to Sheridan, currently managing director of FTI Consulting, the disclosure of the names of clients associated with the failed cryptocurrency exchange poses “a serious and unusual risk of identity theft, asset theft, personal attack, and increased online victimization.”
“If the names of individual clients are made public in these Chapter 11 cases, such information will provide potential wrongdoers with a detailed list of vulnerable targets.”Sheridan said. “In particular, it will provide wrongdoers with a menu of potential targets through disclosure of the Debtors’ list of assets and liabilities […] And the respective cryptocurrency holdings of each of the Debtors’ clients.”
FTX users who hold large amounts of cryptocurrency, according to Sheridan, would effectively have “a bullseye on their back” and could fall victim to fraud by scammers looking at their wallets. He cited examples of common online scams carried out via email and social media, including setting up fake business and romantic relationships, SIM swapping, and phishing attacks:
“Online fraud and attackers are emboldened, motivated and attracted by high profile cases like Chapter 11. Add to this environment the fact that fraudsters are after your wallet. Add to this environment the fact that cryptocurrency is already an attractive target for bad guys because it’s easy to liquidate, instant, global, and pseudonymous.”
The legal team representing FTX debtors published a list of creditors to whom the exchange owed money in January. However, the names and personal information of the approximately 10 million users had been redacted. A group of media outlets, including Bloomberg and The New York Times, took issue with the wording, claiming that the press and the public had a “right of access” to the information.
The judge, John Dorsey, extended until April 20 the deadline in which customer information could be redacted, also expressing concern that users could take “risks” by making their names public.. FTX debtors and the unsecured creditors committee filed a motion as the extension was about to expire asking the bankruptcy court to review the drafting order. The hearing of the matter is scheduled for May 17, depending on the objections that are presented.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.