Media Outlets Object to Withholding Identities in FTX Bankruptcy Proceedings
Several major media outlets, including Bloomberg, the Financial Times, The New York Times, and The Wall Street Journal's parent company, Dow Jones & Company, have jointly objected to attempts to withhold the identities of non-US customers of cryptocurrency exchange FTX during its bankruptcy proceedings.
In a filing to a Delaware Bankruptcy Court on April 4, the media outlets argued that the press and the public have "a presumptive right of access to bankruptcy filings," and that FTX and its customers have failed to justify the need for secrecy.
While FTX's debtors are able to argue for the names of creditors to be redacted in bankruptcy filings, the media outlets believe that the names of FTX's customers should not be sealed permanently.
The Ad Hoc Committee of Non-US Customers of FTX.com, which represents the interests of FTX's non-US customers, had claimed in a filing on December 28 that publicly revealing the names and private information of non-US customers would leave them vulnerable to identity theft, targeted attacks, and "other injury."
In response, the media outlets argued that if the permanent sealing of customer identities were permissible on the grounds claimed by FTX and the ad hoc committee, then such sealing would become routine in virtually every bankruptcy proceeding.
FTX, which is one of the largest cryptocurrency exchanges in the world, filed for bankruptcy in December 2021, citing a liquidity crisis. The exchange had been struggling to meet customer demands for withdrawals in the wake of a crackdown on cryptocurrency trading in China, where it is based.
Since then, FTX has been engaged in a legal battle with its customers over the release of their identities. The exchange has argued that the identities should be kept secret to protect its customers' privacy, while its customers have argued that the identities should be made public to ensure transparency in the bankruptcy proceedings.
The media outlets' objection to the withholding of customer identities is likely to increase pressure on FTX and its debtors to release the names. However, it remains to be seen how the bankruptcy court will rule on the matter.
Cryptocurrency exchanges have come under increasing regulatory scrutiny in recent months, as governments around the world seek to crack down on money laundering and other illegal activities. The case of FTX is likely to be closely watched by regulators, as it could set a precedent for how cryptocurrency exchanges are regulated in the future.