Former assistant director of the US Secret Service: Keep FTX users' data confidential

By: Michael Wilson

Former assistant director of the US Secret Service: Keep FTX users' data confidential

April 22, 2023 6:39 AM

If their information was revealed, FTX users, according to Jeremy Sheridan, might become the focus of physical danger as well as online scams.


Former assistant director of the United States Secret Service Office of Investigations Jeremy Sheridan has cautioned that if their personal information is made public, certain FTX clients could become targets.


Sheridan backed a motion from the debtors to suppress "certain confidential information" of FTX users in an April 20 declaration filed with the United States Bankruptcy Court for the District of Delaware. According to Sheridan, who is now a managing director at FTI Consulting, disclosing the names of consumers affiliated with the failing crypto exchange offers "a significant and unusual risk of identity theft, assets theft, individual attack, and further online harassment."


"If individual client details become public during these Chapter 11 Cases, such data could provide potential criminals with an itemized list of potential targets," Sheridan explained. "In particular, it will provide malefactors with a menu of potential targets by disclosing the Debtors' schedules of liabilities and assets, as well as each of the Debtors' clients' individual crypto holdings."


According to Sheridan, FTX users with huge quantities of cryptocurrency have "a target on their back" and may be victims of fraud by criminals looking through their wallets. He gave instances of popular email and social media scams, such as establishing phony business and romantic ties, SIM swaps, and phishing attacks:


"High-profile cases like the Chapter 11 Cases embolden, encourage, and attract perpetrators of fraud and online attacks." To make matters worse, bitcoin is already an appealing target for criminals because it is easy to liquidate, quick, worldwide, and pseudo-anonymous."


In January, the legal team representing FTX debtors revealed a list of creditors owed money by the exchange. However, the names and personal information of the roughly 10 million individuals had been removed. A variety of media sites, including Bloomberg and The New York Times, have criticized censorship, stating that the press and public have a "right of access" to the information.


Judge John Dorsey extended the deadline for redacting customer information until April 20, expressing worry that customers' identities would be put "at risk" if their names were made public. When the extension was scheduled to expire, FTX debtors and the committee of unsecured creditors filed a motion asking the bankruptcy court to reconsider the redaction order. Depending on the number of objections filed, the case will be heard on May 17.