A decision to protect FTX customers is under fire by major media outlets including Bloomberg, Dow Jones & Company, The New York Times Company, and the Financial Times, as they argue against sealing the names of individual customers from all filings. According to a Reuters report, these organizations believe that FTX should not have a special exception to bankruptcy disclosure requirements simply because its customers use cryptocurrency.
Bankrupt companies are generally obliged to reveal the names and amounts owed to creditors. However, Judge Dorsey ruled in favor of keeping the names sealed in order to protect the safety of FTX’s customers and prevent scams. This exception is in accordance with U.S. bankruptcy law that addresses the potential risk of identity theft or other harm to the affected parties.
A Dubai-based crypto lawyer, Irina Heaver, has voiced her support for the Judge’s ruling, stating that the media organizations’ appeal seemingly overlooks the unique risks faced by the individuals if their identities were to be revealed. There is significant evidence of the potential harm caused by such disclosure as demonstrated by the “Celsius case” in the past, where a surge in phishing attacks followed the leak of user data by an internal employee.
On the other hand, the media organizations argue that FTX serving customers using cryptocurrency should not exempt it from the typical bankruptcy disclosure requirements, as customer names should still be disclosed under most circumstances.
While this conflict of interest is centered around the protection of FTX’s customers, the media’s appeal could potentially lead to different outcomes in future cases involving customer privacy versus bankruptcy disclosure requirements.
The debate also highlights the unique risks crypto-users face compared to clients involved with traditional financial institutions and services, demonstrating the need for adaptability in legal protocols to accommodate the distinctive attributes of the crypto landscape.
In conclusion, the decision to protect FTX customers from having their names disclosed has sparked a contentious debate on whether cryptocurrency use should grant businesses exceptions to bankruptcy disclosure requirements. The outcome of this case may set significant precedents for future bankruptcy cases involving cryptocurrencies, with attention focused on striking a balance between protecting customer privacy and upholding legal obligations.
Source: Cointelegraph
