Mainstream media challenge decision to protect FTX customers: Report

Saturday, 24 Jun 2023

Cointelegraph By Ciaran Lyons

Original Article

Legal representatives of the media outlets have reportedly argued that FTX is not entitled to a “novel and sweeping exception” just because its customers use cryptocurrency.


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The four major media outlets advocating to release FTX customer names have opposed the decision to seal them. Meanwhile, a crypto lawyer told Cointelegraph that “there is clear evidence” of potential harm if the names were to be disclosed.

According to a June 23 Reuters report, Bloomberg, Dow Jones & Company, The New York Times and the Financial Times have appealed the decision of United States bankruptcy Judge John Dorsey to seal the names of FTX customers from the public.

The decision to allow FTX to “permanently redact” the names of individual customers from all court filings was made by Dorsey on June 9 for the safety of the customers, declaring that they are the “most important issue in this case.”

However, in a June 22 court filing, legal representatives for the media organizations have reportedly challenged this, arguing that FTX is not entitled to a “novel and sweeping exception” to bankruptcy disclosure requirements simply because its “customers used cryptocurrency.”

Media group appeals decision to permanently redact the names of a million FTX customers.

We believe keeping the customer list a trade secret is vital to improve recovery for all in bankruptcy reorganisation.

Seeking to further harm people who are already down is unfortunate.

— FTX 2.0 Coalition (@AFTXcreditor)

June 23, 2023

The media outlets have stood by the fact that bankrupt companies are usually obligated to disclose the names and amounts owed to their creditors.

Despite this, Dorsey decided to keep the names sealed, stating that he wanted to ensure that customers “don’t fall victim to any scams.”

This is in line with the exception of U.S. bankruptcy law, which addresses the potential risk of harm by disclosure.

It is not the first time the media outlets have objected to the names of FTX customers being sealed, having previously filed an objection on May 3.

In the earlier filing, it was argued that revealing the names wouldn’t subject creditors to “undue risk” and that the list does not qualify as “confidential commercial information.”

Related: FTX seeks to claw $700M from Bankman-Fried friends and affiliated funds

Speaking to Cointelegraph, Dubai-based crypto lawyer Irina Heaver said she applauds the wisdom behind Dorsey’s ruling “in allowing FTX to keep customer names confidential.”

“This appeal by media organizations seems to completely overlook the unique risks faced by the individuals if their identities are revealed,” Heaver stated.

“This is not a hypothetical concern, there is clear evidence of the harm that can be caused by such disclosure. With 9 million users, the potential for widespread financial and personal damage is colossal.”

Heaver pointed to the “Celsius case” as an example, which led to “a surge in phishing attacks” in July 2022.

Celsius depositors received a warning email after the company disclosed that certain customer data had been compromised due to an internal employee leaking a list of emails to a third-party bad actor.

Magazine: Can you trust crypto exchanges after the collapse of FTX?


Cointelegraph By Ciaran Lyons

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