Emily Walker
To enhance its footprint in Europe, Backpack Exchange, a cryptocurrency trading platform founded by former staffers of Sam Bankman-Fried’s FTX and Alameda Research, has purchased the European branch of the insolvent FTX exchange for $32.7 million.
According to a previous Bloomberg report, this acquisition aims to broaden Backpack’s derivatives capabilities in a growing market for regulated crypto derivatives in Europe.
Transfer of FTX EU Bankruptcy Claims
FTX EU was among the branches that entered bankruptcy following the exchange’s downfall in 2022. As a condition of the acquisition, the Dubai-based Backpack will take over the distribution of court-sanctioned bankruptcy claims, amounting to around €53 million ($55 million), to FTX EU’s affected customers.
Previously, the FTX estate sought to reclaim millions from the original owners of FTX EU, but this lawsuit was retracted as part of a settlement that enabled the unit’s sale to co-founders Patrick Gruhn and Robin Matzke, who subsequently sold it to Backpack.
This acquisition is significant as FTX EU possesses a MiFID II license, which allows it to conduct crypto derivatives trading within the European Union.
The transaction has been approved by the Cyprus Securities and Exchange Commission, allowing Backpack to legally function in the area.
Armani Ferrante, Backpack’s CEO, stressed that prioritizing the return of funds to customers is the company’s “top priority” post-acquisition. In an interview, he declared, “We will not serve a single user, nor execute a single trade in the EU until we have the capability to return funds to customers.”
Emerging Player in Cryptocurrency
Established in 2022, Backpack has quickly gained recognition in the sector. Ferrante, who has prior experience with Alameda Research and contributed significantly to the Solana blockchain’s development, offers invaluable insights.
Co-founder Tristan Yver is also a former executive at FTX. Backpack has acquired a virtual asset service provider license in Dubai and is in pursuit of a license to operate in Japan, after successfully raising $17 million last year, leading to a valuation of $120 million.
With the acquisition of FTX EU, Backpack is set to provide regulated crypto derivatives, including perpetual swaps, which are futures contracts that have no expiration, across the European Union.
As the regulated crypto derivatives market in Europe draws increasing interest from crypto companies, evidenced by Coinbase Global Inc.’s recent acquisition of a brokerage unit in Cyprus also holding a MiFID II license, firms are keen to tap into this sector.
“Derivatives account for a large portion of crypto trading volume,” Ferrante observed, expressing excitement over the opportunity to reintroduce crypto derivatives trading to the EU.
As the landscape evolves, companies like Backpack are likely to be pivotal in shaping the future of cryptocurrency by delivering innovative and regulated products to satisfy rising demand.
Currently, FTT, the native token of the defunct exchange, is trading at $3, reflecting a broader market correction with an approximate 11% decrease.
Featured image from DALL-E, chart from TradingView.com