FTX User Names: Media Houses Appeal to Overturn Court Redaction Decision
Several major media outlets have filed an appeal aiming to overturn a bankruptcy court's decision to redact the names of FTX users permanently.
In a recent filing with the US Bankruptcy Court for the District of Delaware, The New York Times, Dow Jones & Company, Bloomberg, and the Financial Times argued that there is a "presumptive right" for the public to inspect bankruptcy filings and that keeping the names concealed effectively denies that right.
The media houses previously filed a motion to have the names of FTX creditors unsealed in December 2022, but Bankruptcy Court Judge John Dorsey ruled to keep the customer names sealed for three months.
When the media companies again filed an objection to the redaction decision in May 2023, Judge Dorsey sided with FTX once more, prioritizing creditors' safety and ordering FTX to "permanently redact" the names of its customers.
Now, the media houses are making a third attempt to have the names of FTX creditors disclosed, with lawyers representing the firms arguing that FTX is not entitled to an exception to the disclosure requirements simply because its customers used cryptocurrency.
In his latest ruling, Judge Dorsey claimed that publishing the names of individual customers could put them at risk of scams and identity theft.
Dorsey made it clear that FTX should prioritize customer safety and make sure they don't fall victim to scams.
"It is the customers who are the most important issue in this case," he said. "We want to make sure that they are protected and they don't fall victim to any types of scams."
The court also granted permission to FTX to remove names of companies and institutional investors from its customer lists temporarily. The exchange will have to make another request in 90 days if it wants to keep them redacted.
FTX Seeks to Recover Funds Funds Transferred by Bankman-Fried to Investment Firms
Last week, FTX filed a complaint in Wilmington, Delaware, bankruptcy court, asking back the $700 million its founder Sam Bankman-Fried transferred to K5 entities in 2022.
The exchange claimed that Bankman-Fried was a "profligate patron" who sent millions to K5 Global as well as affiliated entities and K5 Global co-owners Michael Kives and Bryan Baum after he attended a social event hosted by Kives in 2022.
FTX has sought the return of funds, describing the transfers as being carried out “without receiving equivalent value” and, more importantly, avoidable, meaning that they can be reversed under the Bankruptcy Code or other laws.
Meanwhile, the bankrupt crypto exchange is facing escalating legal and advisory costs.
According to filings submitted by the exchange’s bankruptcy advisors, the advisors have billed the company a staggering $121.8 million in fees and expenses for the period between February 1 and April 30.