A cohort of press houses deposit an appeal on June 23 to overturn a bankruptcy court’s decision to permanently remove FTX user names. Publishing giants include Dow Jones & Company, Bloomberg, The New York Times and the Financial Times.
Ongoing issue
FTX filed for bankruptcy in November 2022. Since then, FTX lawyers and users have advocated keeping the list of FTX’s nearly 9 million creditors confidential. Creditors argue that disclosing the names of FTX customers would expose them to the threat of scams and identity theft.
It should be noted that in typical bankruptcy proceedings, the list of creditors is usually made public, as in the Celsius bankruptcy case. So, in December 2022, the four media giants filed a motion to have the names unsealed.
However, in January, Bankruptcy Court Judge John Dorsey sided with FTX’s lawyers and decided to keep the clients’ names sealed for three months.
In May 2023, the media houses again filed an objection to the editorial decision. They argued that the public has a “deemed right” to inspect FTX’s bankruptcy filings. Like everyone else, the companies noted that FTX creditors could fall prey to scams or fraud. However, that’s not reason enough to keep the names hidden because “virtually every party to a bankruptcy proceeding could plead anonymously.”
Despite media objections, Judge Dorsey again ruled in favor of FTX on June 9. The judge prioritized the safety of creditors and ordered FTX to “permanently delete” the names of its clients. The judge also asked that the names of the companies and institutional investors be temporarily sealed.
His decision was consistent with the bankruptcy law exception, which considers the risk of harm in the event of disclosure.
Third attempt
With the recent filing, news organizations are attempting to release the names of FTX creditors for the third time. Lawyers representing the firms argue that FTX is not entitled to the “new and sweeping exception” to the disclosure requirements simply because its clients used cryptocurrency.
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