Last Updated on May 4, 2023 by Bitfinsider

The New York Times, The Financial Times, and Bloomberg have asked a U.S. bankruptcy court to disclose the names of 9 million FTX customers despite the risk of exposing them to “pig butchering” scams powered by artificial intelligence.

The bankruptcy court has withheld the complete list of creditors for fear of exposing them to hackers, phishing schemes, and other con artists who prey on individuals desperate to recoup their savings. The majority of the nine million are consumers whose funds were trapped or lost on the defunct cryptocurrency exchange operated by Samuel Bankman-Fried. The deadline for renewing the seal is approaching in 90 days, and the media companies want the names disclosed.

There is a presumption of candour and transparency in bankruptcy proceedings under federal law in the United States. The media coalition argued in a May 3 filing that it is normal for lists of creditors to be made public when a business fails. However, there is no legal basis for allowing crypto users to participate anonymously in bankruptcy proceedings.

Previously, the debtors in control of FTX’s shell argued that crypto customers are uniquely vulnerable when their confidential information is exposed. A security expert for FTX stated in an affidavit that FTX customers are likely to fall victim to scams such as “pig butchering,” in which victims are persuaded to invest money in a crypto account controlled by a scammer posing as a trusted intermediary who claims to be helping them restore their funds. Once the account is filled, the con artist will withdraw the funds.

Jeremy Sheridan, FTX’s security expert, stated in a 20 April court filing that artificial intelligence platforms such as ChatGPT now make this even simpler for fraudsters.