A consortium of media companies appealed a court ruling that allowed collapsed crypto exchange FTX to keep client names confidential during bankruptcy.
This month, U.S. Bankruptcy Judge John Dorsey in Wilmington, Delaware, decided that FTX did not have to provide its clients’ names because it could expose them to identity theft and other scams. U.S. bankruptcy law exempts information that could lead to identity theft or other harm from being disclosed by bankrupt corporations.
Bloomberg, Dow Jones, The New York Times, and the Financial Times challenged Dorsey’s decision. FTX’s attorneys have argued that its clients’ Bitcoin use does not justify a “novel and sweeping exception” to bankruptcy disclosure obligations.
FTX claims that cryptocurrency users are at more risk of scams and identity theft, using Celsius Network’s collapse as an example.
According to FTC’s court filings, phishing assaults from scammers posing as bankruptcy attorneys and Celsius workers increased after the Celsius judge ordered clients’ names to be published.
If their names were released, 9 million FTX users might be scammed. FTX did not immediately comment. Media group lawyers did not immediately comment on their appeal.
FTX Trading and over 100 affiliates filed for bankruptcy in Delaware in November to address charges that the company mishandled and lost billions in clients’ crypto deposits. FTX founder Sam Bankman-Fried denies skimming billions from consumers to cover hedge fund losses.
