The four major media outlets that advocate releasing the names of FTX clients have opposed the decision to seal them. Meanwhile, a cryptocurrency lawyer told Cointelegraph that “there is clear evidence” of potential harm if the names were revealed.
According to a Reuters report on June 23, Bloomberg, Dow Jones & Company, The New York Times and the Financial Times have appealed US bankruptcy judge John Dorsey’s decision to seal the names of FTX clients to the public.
The decision to allow FTX to “permanently redact” individual client names from all court filings was made by Dorsey on June 9 for client safety, stating that they are the “most important issue in this case.”
However, in a court filing on June 22, legal representatives for the media organizations reportedly challenged this, arguing that FTX is not entitled to a “sweeping novel exception” to the bankruptcy disclosure requirements simply because their “clients used cryptocurrencies.”
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 further harm people who are already down is unfortunate. pic.twitter.com/0fbpvIE9We
— FTX 2.0 Coalition (@AFTXcreditor) June 23, 2023
The media group is appealing the decision to permanently suppress the names of one million FTX customers.
We believe that keeping the client list a trade secret is vital to enhancing everyone’s recovery in bankruptcy reorganization.
It is unfortunate that people who are already depressed are intended to be further harmed.
The media have maintained the fact that bankrupt companies are often required to disclose the names and amounts owed to their creditors.
Despite this, Dorsey decided to keep the names secret, stating that he wanted to make sure customers “didn’t fall victim to any scams.”
This is in line with the exception in US bankruptcy law, which addresses the potential risk of harm from disclosure.
It is not the first time that the media has objected to FTX client names being stamped, having previously filed an objection on May 3.
In the earlier filing, it was argued that revealing the names would not subject creditors to “undue risk” and that the listing is not considered “confidential business information.”
Speaking to Cointelegraph, Dubai-based cryptocurrency lawyer Irina Heaver said she applauds the wisdom behind Dorsey’s ruling “by allowing FTX to keep client names confidential.”
“This appeal by media organizations seems to completely miss the unique risks that people face if their identities are revealed,” Heaver said.
“This is not a hypothetical concern, there is clear evidence of the damage such a disclosure can cause. With 9 million users, the potential for widespread personal and financial damage is colossal.”
Heaver pointed to the “Celsius case” as an example, which sparked “a wave of phishing attacks” in July 2022.
Celsius depositors received a warning email after the company disclosed that certain customer data had been compromised when an internal employee leaked an email list to a malicious third party.
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