Four major media outlets Bloomberg, Dow Jones, The New York Times, and the Financial Times have expressed opposition to the decision to withhold the names of FTX clients. These outlets had initially advocated for the disclosure of the client names. However, a cryptocurrency la wyer has emphasized the potential harm that could be caused if the names were revealed, citing clear evidence of possible damage.
On June 23, Reuters reported that the media organizations filed an appeal against US Bankruptcy Judge John Dorsey's ruling to keep the names of FTX clients private. Judge Dorsey had made this decision on June 9, allowing FTX to permanently delete individual c client names from all court filings in order to prioritize client safety, stating that it is the most critical issue in the case.
In a court filing on June 22, the legal representatives of the media organizations contested this decision, arguing that FTX does not meet the criteria for an exception to the novel and comprehensive bankruptcy disclosure requirements simply because its customers used c Cryptocurrencies. The media organizations insist that Bankrupt companies typically disclose the names and amounts owed to creditors. However, Judge Dorsey has maintained his stance of keeping the names private, expressing his intention to safeguard clients from potential scams.
This withholding of names aligns with an exception in US bankruptcy law, which aims to address the risk of possible damage resulting from disclosure. The media had previously raised objections to the blocking of FTX client names on May 3, asserting that revealing the names would not pose undue risk to the creditors and that the list does not qualify as confidential business information. A cryptocurrency lawyer, Irina Heaver, supports Judge Dorsey's ruling, applauding the decision to keep the clients' names private. Heaver emphasizes that the me dia organizations' appeal fails to consider the significant risks individuals face if their identities are compromised.
Heaver cites the "Celsius Incident" as an example, which led to a surge in phishing attacks in July 2022. Following the disclosure by Celsius that certain customer data had been compromised due to an internal employee leaking an email list to a third party , depositors received warning emails. These incidents highlight the potential for widespread financial and personal damage that could arise from client identity disclosures, especially considering FTX's large user base of 9 million individuals.
