When cryptocurrency companies were founded, one of its major strengths according to them was customer anonymity and privacy. This had both its pluses as minuses as customers could feel that they were in charge of their privacy but this also led to these exchanges being used for what could be termed as several illegal transactions. However, the recent collapse of the Celsius network and FTX is putting the much touted privacy concerns in the forefront as companies might have to share client data as per chapter 11 filing.
In September, a court ruled that Celsius Network LLC had to disclose the names of its account holders as well as coin balances. With one ruling, hundreds of thousands of customers of the crypto company lost their much touted privacy, as per the rules of chapter 11 bankruptcy filing.
FTX exchange filed for bankruptcy in November, after its former CEO Sam Bankman-Fried reported secretly transferred more than a billion dollars of customers funds to keep afloat trading company Alameda Research. According to reports, more than a hundred million dollars was also spent buying real estate for the company and its top executives in The Bahamas. The company and its top executives are currently under investigation.
In its court papers, FTX management claims that its customer information needs to be kept under seal as it would be crucial for the company to maintain its competitive advantage as well as to protect the privacy of its customers.
Major media houses such as The Wall Street Journal, Bloomberg LP, the New York Times, the Financial Times and emerging media houses including CWeb News oppose the sealing request of FTX.
Bankruptcy helps troubled businesses to resolve debts by making companies work in transparent ways as they exchange information about the working of the company, names and businesses of their counterparts and their known creditors.
If an exception is made for FTX, then this would be against the current bankruptcy rules that have been followed, to date. The current rules allow creditor lists and more to be historically open to the public including the media, after a company files for bankruptcy.
Many in the media as well as in FTX management are waiting to see in whose side the coin falls: FTX Exchange or The Fourth Estate (Press and Media), if and when the court rules.
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