Just a guess but would be open to exploit if the client had access to data hidden to the player’s current state in the game.
As in the location and type of objects outside the grid (and even hidden objects within the grid like cloaked ships for example) as a competent programmer or hacker could intercept related incoming data even if the client does not display them (or alter the client to actually display them but I think this would be more difficult than to just intercept such data).
I recall there was some exploit that the client recognized cloaked ships warping into grid (even if did not actually display it) which was used to alert the player to the fact so the devs had to alter this behavior so that the client do not receive such data in the future.
So based on these I say it is (or at the very least should) be handled server side instead of client side.
Edit: Just a quick reference in case someone is interested in further reading about it: