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Court filing ‘doxing’ Celsius users draws questions on KYC, bankruptcy processes

7 Oct, 20223 min readRegulation
Court filing ‘doxing’ Celsius users draws questions on KYC, bankruptcy processes

On Oct. 5, disgraced CeFi lender Celsius filed Schedules of Assets and Liabilities and Statements of Financial Affairs as part of its Chapter 11 bankruptcy proceedings.

Most of the over 14,000-page document is related to information about Celsius creditors, including users’ names and their transactions on the platform.

Crypto Twitter has blasted the document for “doxing” users. For example, YouTuber Coffeezilla said the move was poor form, especially soon after it was revealed that former CEO Alex Mashinsky allegedly withdrew $10 million before freezing customer accounts on June 13.

Celsius just doxxed all their users and oh by the way—- we found out their CEO withdrew $10 million right before bankruptcy.— Coffeezilla (@coffeebreak_YT) October 6, 2022

Questions are also being asked on the merits of Know Your Customer (KYC) requirements and whether user disclosures were necessary, especially considering the circumstances of the lender’s downfall.

Celsius files public documents containing user information

Despite the fallout, under Chapter 11 bankruptcy rules, a “Creditor Matrix,” or list of creditors’ names and addresses, is required for public record. The court uses this information to send notices and claims data to keep the bankruptcy process open and transparent.

In a court filing dated Sept. 28, Celsius requested to redact the personally identifiable information of its users.

The creditor list is split into two types, commercial creditors and users that Celsius owes. Information on the former is in full, whereas addresses for Celsius users have been redacted.

As such, the “doxing” of users is down to U.S. bankruptcy law rather than malicious intent on the part of Celsius.

Nonetheless, some Celsius users, who have not experienced bankruptcy procedures, expressed their grievances with the process via social media.

Know Your Customer

Financial services firms use KYC standards to verify customers and assess their risk profiles. The measures counter fraud, corruption, money laundering, and terrorist financing.

Critics have argued that the process is intrusive and against personal privacy rights. However, driven by dictates from the intergovernmental organization the Financial Action Task Force (FATF,) the cryptocurrency space has come under increasing pressure to comply in recent years.

Commenting on the Celsius “doxing,” the CEO of Luxor Mining, Nick Hansen, said the situation is “a perfect demonstration of why KYC only hurts honest consumers.”

Further, CoinDesk Writer Zack Voell chimed in by turning the situation around and painting KYC as the “illegal activity” here.

KYC Is The Illegal Activity— Zack Voell (@zackvoell) October 7, 2022

The issue has reignited discussion over the merits of KYC in general, such as the safety of personal data held with CeFi platforms and whether DeFi, which doesn’t require KYC disclosures, is the solution.

A FATF report dated June 2022 mentioned working on new standards to incorporate rules governing DeFi and NFTs.

Samuel is a strong believer in individual autonomy and personal freedom. He is a relative newcomer to the world of cryptocurrency, having first bought Bitcoin in early 2017, but keen to make up for the lost time.

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