Backpack acquires FTX EU
Backpack Exchange, a crypto exchange that joined the Japan Virtual Currency Exchange Association (JVCEA) last December, has recently acquired FTX EU, the European arm of the failed crypto exchange business FTX.
According to a press release, the business comes with a European MiFID II license, with the acquisition having been approved by the Cypriot regulator, the Cyprus Securities and Exchange Commission (CySEC). Furthermore, a Delaware bankruptcy court in the United States, which is dealing with the FTX bankruptcy, has also rubber-stamped the acquisition.
Backpack Exchange was co-founded by CEO Armani Ferrante, alongside other former FTX executives. According to the firm’s LinkedIn page, it has established its headquarters in Japan. The company also has links to Dubai, having acquired a Virtual Asset Service Provider (VASP) license for its Backpack Wallet product from Dubai’s Virtual Assets Regulatory Authority (VARA) in 2023.
Rebuilding trust
As a consequence of having acquired FTX’s European arm, Backpack Exchange will now assume responsibility for the distribution of court-approved FTX bankruptcy claims to FTX EU users. In the company’s press release, Ferrante spoke of the importance of the distribution process in rebuilding trust. He stated:
"Customer restitution is a crucial step to rebuild trust and confidence in the industry, and Backpack is committed to returning FTX EU customers’ funds as fast and as safely as possible."
In response to a query from FTX creditor activist Sunil Kavuri on X, Ferrante outlined that FTX EU users “will only be able to claim their euro claims funds directly from Backpack EU.”
Ferrante clarified that FTX EU customers who had pending crypto withdrawals at the time of the bankruptcy will have their crypto claims dealt with via the FTX bankruptcy estate.
In a Series A financing round early last year, Backpack was valued at $120 million. Through FTX EU, it now acquires a MiFID II license, further facilitating the global expansion of the company.
With FTX EU now forming Backpack’s EU arm, the company will offer crypto-derivative products, including perpetual futures. This product offering is scheduled to go live in Q1 2025.
Bankruptcy process controversy
The bankruptcy of FTX EU has been controversial, starting off with the European entity being illegally filed into a U.S. bankruptcy process. In early 2024, the FTX Debtors suggested that the entity was worthless. It later wanted to buy out the entity itself, outbidding a third-party bidder. A short time afterwards, the FTX Debtors reached a settlement with the former FTX EU team. It’s understood that Backpack has acquired FTX EU for $32 million.
The FTX Debtors’ attempt to buy the business itself has cast a cloud over the bankruptcy process. When it first emerged that the business had been sold, there was some speculation as to if this would mean a rebooted FTX within the European market, but Backpack’s acquisition confirms that this was not to be the outcome.
Japan could have offered another opportunity to reboot the business, but instead, FTX Japan was acquired by bitFlyer and absorbed into its existing business. With regard to the main FTX business entity, the FTX Debtors told the bankruptcy court that there was no interest in the business from buyers.
