Unmasking FTX’s Non-U.S. Customers: Media Outlets Battle for Transparency

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In a recent filing on May 3rd to the United States Bankruptcy Court, four leading media outlets—Bloomberg, Dow Jones, The New York Times, and the Financial Times—have once again raised objections against the motion to redact and withhold the identities of non-U.S. FTX customers. In addition, these outlets continue challenging the legality of concealing customer information under non-U.S. data privacy laws.

Background: Initial Motion to Seal Customer Information

The dispute began on January 11th when the media outlets first objected to FTX and the Official Committee of Unsecured Creditors’ authorization to redact and withhold customer identities. The court had previously heard similar arguments from these firms. However, the May 3rd filing introduced a new objection to the Committee’s motion to seal the identities of non-U.S. customers.

In their most recent argument, the media outlets contend that there is no legal foundation for redacting the names by non-U.S. data privacy laws. They cite Section 105 of the Bankruptcy Code, which grants the bankruptcy court judicial power, as having no provision allowing foreign law to override the right of access to information under U.S. constitutional and statutory law. The media giants argue:

“At the bottom, Movants desire to avoid ‘enforcement of the public disclosure requirements of U.S. bankruptcy law’ […] furnishes no basis for sealing.” “The law of the United States—constitutional and statutory—guarantees the public a strong presumptive right to inspect bankruptcy filings. That right cannot be abrogated by a party’s assertion of legal obligations under foreign law.”

Key Arguments: FTX User Confidentiality and Undue Risk

The media outlets have raised two primary arguments in their pursuit of transparency. The first argument previously claimed in an earlier filing is that the names of FTX’s creditors do not constitute “confidential commercial information.” The second argument also raised earlier, asserts that disclosing the identities would not subject the creditors to “undue risk.”

FTX and the Official Committee of Unsecured Creditors have until 4:00 PM Eastern Time on May 4th to submit an objection to the media outlets’ filing. The hearing date for the filing is scheduled for May 17th at 1:00 PM.

As the media giants continue their battle for transparency in bankruptcy proceedings, the outcome of this case will likely set a precedent for future disputes involving protecting customer information under non-U.S. data privacy laws.

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