Media outlets are challenging privacy in FTX bankruptcy

The US Bankruptcy Trustee in Delaware and lawyers for several major media outlets are challenging an attempt by cryptocurrency exchange FTX to withhold from the public the names of the company’s customers and creditors.

At a hearing on Friday, the judge presiding over FTX’s bankruptcy granted a motion to intervene aimed at objections to the sealing of creditor information by The Financial Times, New York Times and other newsrooms. In a court filing earlier this week, an attorney for the Acting US Trustee of Delaware said that “disclosure is a fundamental pillar of bankruptcy law.”

Juliet Sarkeesian wrote, “Debtors simply cannot seek bankruptcy protection and then conduct business behind a shield of secrecy.”

Sarkeesian warned that allowing FTX to mold the list of creditors and financial schedules would be a “slippery slope” and would set an unfavorable precedent for bankruptcies in which creditors are also customers.

Last month, Dorsey temporarily requested FTX redact the names and addresses of customers and creditors from court filings, even though such information is generally public. The judge directed FTX to file an unrestricted creditor matrix under seal with the court, but the company has not yet done so.

FTX’s lawyers have argued that its client list is both a valuable asset and confidential commercial information. They argue that the privacy is needed to protect FTX accounts from potential theft and to ensure that potential competitors do not “poach” FTX customers.

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“The debtors have been accused of a lack of transparency in their business. It appears that this mindset has carried over to this bankruptcy,” attorney David Finger wrote in court documents.

Media companies argue that FTX is trying to hide information that has historically been public. While the trustees and the media companies have not objected to withholding addresses and contact information of customers and creditors, they argue that names should be disclosed.

“The court should treat the foreign nationals no differently than the United States citizens implicated in this case,” Finger wrote in a court filing last week.

FTX Was Suddenly One of the World’s Largest Cryptocurrency Exchanges Before failed last month, Users withdrew nearly $5 billion of crypto assets in a single day as concerns grew over the exchange’s solvency. Its former CEO, Sam Bankman-Fried, has been arrested on charges of fraud and money laundering. He is currently in jail in the Bahamas awaiting extradition to the US

House committee holds hearing on FTX collapse


John Ray III, who stepped down as CEO following Bankman-Fried’s resignation on Nov. 11, told a House hearing this week that approximately The collapse caused $7 billion in damage., Ray alleged that Bankman-Fried and others at FTX misappropriated client funds, causing losses.

Federal authorities have accused Bankman-Fried of knowingly mixing client funds with investments FTX made through her hedge fund, Alameda Research.

FTX became the fourth crypto-focused company to declare bankruptcy this year, joining Blockfi, Celsius Network and Voyager Digital.

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