Judge’s FTX Client Confidentiality Order Receives Strong Media Outcry

Key Points:

• 4 major newspapers protested that the bankruptcy judge of FTX allowed to keep customer information confidential.
• Legal representatives of the media have argued that FTX is not entitled to an exception for using cryptocurrency.
• The judge found this consistent with an exception in U.S. bankruptcy law that addresses potential harm from disclosure.

Bloomberg, Dow Jones, New York Times, and Financial Times have appealed Judge John Dorsey’s ruling on June 9, allowing FTX to “permanently remove” individual customers from all records of the confidential name and to protect the legal rights of FTX.

A legal representative for the media organization argued that FTX is not entitled to a “new and broad exception” to bankruptcy disclosure requirements simply because its clients used cryptocurrencies. The media has stood by the fact that bankrupt companies are often obliged to disclose the names and amounts owed to their creditors.

Judge Dorsey previously ruled that he wanted to ensure customers” are protected from becoming a victim of any fraud,” which is consistent with the exception of U.S. bankruptcy law to address the potential risk of identity theft or other harm.

Reportedly, bankrupt companies are generally required to disclose the names of their creditors and the amount of their debts, including those owed to individual customers. Still, there are exceptions in U.S. bankruptcy law. Disclosure of information may create the risk of identity theft or other damages.

This is not the first time the media has protested the sealing of the names of FTX customers, having previously filed an objection on May 3.

Bloomberg, Dow Jones, The New York Times, and Financial Times first filed petitions against FTX and the Official Committee on Unsecured Creditors to redact and withhold customer information for the first time on January 11h.

In the previous filing, it was argued that the name disclosure would not expose creditors to “undue risk” nor that the listing did not qualify as “confidential commercial information”.

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