The four major media outlets advocating for the release of 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 Reuters report published on June 23, Bloomberg, Dow Jones & Company, The New York Times, and the Financial Times appealed Judge Dorsey’s June 9 ruling, which granted FTX to“permanently redact” the names of individual customers from all filings for their safety.
However, legal representatives for the media organizations reportedly argued 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. pic.twitter.com/0fbpvIE9We
— 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 made the decision on June 9 to keep the names sealed stating that he wants to ensure the customers “are protected and they don’t fall victim to any scams.”
This is in line with the exception in U.S. bankruptcy law that addresses the potential risk of identity theft or other harm.
It is not the first time the media outlets have objected to the customer names 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” as well as contending 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 the Judge’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 at 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.
The breach occurred 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?