In a bid to reverse a bankruptcy court’s decision to permanently redact the names of FTX users, several prominent media outlets have lodged an appeal. The New York Times, Dow Jones & Company, Bloomberg, and the Financial Times recently submitted a filing to the US Bankruptcy Court for the District of Delaware, contending that the public holds a “presumptive right” to access bankruptcy filings, and withholding the names infringes upon that right.
Back in December 2022, these media organizations had initially requested the unsealing of FTX creditor names. However, Bankruptcy Court Judge John Dorsey ruled in favor of keeping the customer names concealed for a period of three months. When the media companies raised objections to this decision again in May 2023, Judge Dorsey sided with FTX, emphasizing the importance of prioritizing creditor safety, and instructed FTX to permanently redact the customer names.
Now, the media outlets are making a third attempt to unveil the identities of FTX creditors, with their legal representatives arguing that FTX should not be granted an exception to disclosure requirements simply because its customers used cryptocurrency.
In his latest ruling, Judge Dorsey expressed concerns that disclosing individual customer names could expose them to scams and identity theft. He emphasized the significance of safeguarding customers, stating, “It is the customers who are the most important issue in this case. We want to make sure that they are protected and they don’t fall victim to any types of scams.”
Furthermore, the court authorized FTX to temporarily remove the names of companies and institutional investors from its customer lists. However, FTX will need to submit another request in 90 days if it wishes to maintain redaction for these entities.
FTX is currently pursuing the recovery of funds that were transferred by Bankman-Fried, the founder of the exchange, to investment firms.
Last week, FTX, the cryptocurrency exchange, made a significant move by filing a complaint in the bankruptcy court located in Wilmington, Delaware. The purpose of this legal action is to reclaim the substantial sum of $700 million that its founder, Sam Bankman-Fried, had transferred to various K5 entities in 2022.
FTX has taken a firm stance, contending that Bankman-Fried, in his capacity as a “profligate patron,” lavishly channeled millions of dollars to entities associated with K5 Global. Notably, significant transfers were also made to K5 Global co-owners Michael Kives and Bryan Baum following Bankman-Fried’s attendance at a social gathering hosted by Kives in the same year.
Asserting that these transfers were conducted “without receiving equivalent value,” FTX is steadfast in its demand for the return of the funds. Furthermore, FTX argues that the transfers were avoidable, implying that they can be reversed under the provisions of the Bankruptcy Code or other relevant laws.
Meanwhile, FTX finds itself confronted with the escalating costs of legal proceedings and advisory services. The bankruptcy advisors engaged by the exchange have recently submitted filings disclosing an astonishing total of $121.8 million in fees and expenses billed to the company. These substantial costs encompass the period ranging from February 1 to April 30 and underscore the magnitude of the challenges faced by FTX during its bankruptcy proceedings.