BlockFi’s cryptocurrency creditors have pleaded with the court to protect the confidentiality of their personal data.

They assert that revealing their names as part of the bankruptcy process could expose them to identity theft or hacking. The odd request stems from an incident involving Celsius, a different cryptocurrency lender, in which the financial data of tens of thousands of consumers was made public as part of routine legal procedure.

Asserting that disclosure is “a key concept of bankruptcy law” and necessary to avoid any suggestion of unlawful behavior, Andrew Vara, a U.S. Department of Justice official in charge of bankruptcy cases, made this claim in a separate filing to the New Jersey bankruptcy court.

However, BlockFi’s creditors are concerned about the possible consequences of publicizing their private information.

Giving up a valued client list for free, according to a committee of BlockFi creditors, would reduce the estate’s value and leave them more vulnerable to theft.

They cited experienced Bitcoin developers like Luke Dashr as an example, who had previously been the target of attacks.

The creditors contend that by maintaining the confidentiality of their personal information, they will be better equipped to protect themselves from any threats.

On January 11, Judge Michael Kaplan will hear arguments in the FTX case about the motion to publish the creditor list. Then, on January 17, the judge is set to hear arguments in the BlockFi case.

Creditors of BlockFi are hoping that their case will be treated differently from those of Celsius and FTX and that their personal information will be kept hidden to protect themselves from potential threats.

As Creditors’ Rights attorneys, we are of course very interested in seeing where the court will land on this decision.  The Transparency Concept can be boiled down to this, if a Debtor must fully disclose all details in a Bankruptcy action, so must the Creditors that chose to participate in the action.

 

 

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