Media Raises Validity Concerns about FTX User Protection; Report Indicates

Media reports have surfaced wondering if the user protection measures offered by FTX, a prominent cryptocurrency exchange, are valid. Security protocols and safeguards in place to protect user funds are questioned in the reports. 

FTX’s user protection mechanisms are closely monitored by the cryptocurrency community and industry observers.

Media Pressures FTX for Transparent Customer Name Disclosure

Media representatives say FTX shouldn’t get special treatment or exemptions because its customers use cryptocurrencies. The company should follow the same rules as other businesses without “unique and broad exceptions.” The arguments highlight the ongoing debate about cryptocurrency exchange regulations.

Some media outlets have criticized FTX’s decision to keep customers’ names confidential. Another cryptocurrency lawyer said revealing these names could cause harm, citing compelling evidence to support his claim. FTX is in the midst of a debate about disclosing customer information.

Bloomberg, Dow Jones & Company, The New York Times, and the Financial Times have raised objections to Judge Dorsey’s order to keep FTX customer names confidential, according to a recent report on June 23.

FTX’s decision to “permanently redact” the names of individual customers from all court filings was made by Dorsey on June 9 for the customers’ safety, declaring that they are the “most important issue in this case.”

Lawyers for the media organizations filed a court document on June 22 disputing this. Due to its customers’ use of cryptocurrency, FTX shouldn’t get a special exception to bankruptcy disclosure rules.

FTX’s Confidentiality Sparks Media Outcry: Clash between Bankruptcy Rules and Privacy Concerns

Several media outlets have asserted that bankrupt companies should reveal their creditors’ names and the amount owed. According to them, FTX should also be disclosed.

Dorsey, however, decided to keep the seal, explaining that he wanted to protect customers from scams.

U.S. bankruptcy law has an exception to prevent potential harm caused by revealing customer names. FTX customer names were sealed on May 3 after the media outlets objected. 

Previously, it was argued that disclosing customer names didn’t pose an excessive risk to creditors. In addition, the customer list doesn’t meet the criteria for being classified as “confidential commercial information.”

Dubai-based crypto lawyer Irina Heaver told Cointelegraph she applauds Dorsey’s decision “in allowing FTX to keep customer names confidential.”

Heaver stated,

This appeal by media organizations seems to completely overlook the unique risks faced by the individuals if their identities are revealed. 

This is not a hypothetical concern, there is clear evidence of the harm that can be caused by such disclosure. With 9 million users, the potential for widespread financial and personal damage is colossal.

According to Heaver, the “Celsius case” significantly increased phishing attacks in July 2022. Celsius depositors got an email about a data breach where certain customer information was compromised. An internal employee leaked an email list to a malicious third party. 

Over 23,000 people were affected by this data breach. Hackers used the leaked email list to send phishing emails to vulnerable customers. Across the country, this sparked a phishing wave.