USDBackpack Exchange Expands into EU with $32.7 Million FTX EU Acquisition, Addresses Controversy
Regulatory Approval Sets the Stage for Strategic Growth
Backpack Exchange has secured a significant foothold in the European cryptocurrency market with its $32.7 million acquisition of FTX EU, the European arm of the defunct FTX platform. The deal, approved by both the FTX bankruptcy court and Cyprus Securities and Exchange Commission (CySEC), grants Backpack EU access to FTX EU's MiFID II license. This regulatory framework enables the exchange to offer compliant crypto derivatives across Europe, positioning it as a key player in the region’s evolving crypto landscape.
The acquisition aligns seamlessly with the EU’s newly introduced Markets in Crypto-Assets Regulation (MiCA), which has tightened compliance requirements for crypto services since its implementation on December 30, 2024. While other exchanges have scaled back operations in response to MiCA, Backpack Exchange is moving against the tide, leveraging this regulatory clarity to solidify its market presence. The CEO of Backpack Exchange, Armani Ferrante, described this expansion as a calculated move to dominate the regulated perpetual futures trading market in the EU, a significant niche left underserved due to mounting regulatory pressures on offshore exchanges.
The launch of Backpack EU is slated for Q1 2025, with a phased rollout of trading products, including spot, margin, and futures trading. The initial focus, however, will be on returning EURO-denominated customer funds linked to FTX EU accounts. Customers will be required to register with Backpack EU using the same email credentials associated with their FTX EU claims to facilitate the repayment process. It’s important to note that these repayments will exclusively cover claims related to FTX EU, excluding liabilities tied to other FTX entities.
FTX EU’s repayment amounts are currently under determination by the bankruptcy court, but Backpack Exchange has assured swift and secure processing as a top priority. This approach is seen as an effort to restore trust in the digital asset industry, which has faced scrutiny following FTX’s collapse. The broader reorganization of FTX, announced on January 3, 2025, underscores this shift. As part of the reorganization plan, payments to Convenience Class creditors with claims under $50,000 are being disbursed, with initial phases managed by Kraken and BitGo. Total distributions are projected between $14.7 billion and $16.5 billion, potentially returning 118% of affected customers' original investments.
The deal highlights the growing importance of regulatory compliance in maintaining operational viability in Europe. While the introduction of MiCA has fostered a structured market environment, it has also caused notable shifts, such as the delisting of certain tokens, including Tether’s USDT, from EU markets. These regulatory shifts have created both challenges and opportunities, with Backpack Exchange clearly opting to capitalize on the latter. Speculation suggests that funds distributed to FTX creditors may eventually re-enter the crypto market, potentially igniting bullish trends and adding momentum to Backpack EU’s market debut.
Backpack Responds to FTX EU Acquisition Dispute, Outlines Customer Funds Refund Plans
Backpac’s FTX EU deal has sparked intense scrutiny, particularly over disputes regarding ownership and the responsibility to return customer funds. This acquisition comes amidst ongoing efforts to untangle the complexities surrounding FTX’s collapse, which continues to reveal financial and legal entanglements.
The timeline of events highlights the controversial nature of this deal. In March 2024, FTX EU shares were reportedly sold to insiders Patrick Gruhn and Robin Matzke, with the transaction receiving approval from the FTX bankruptcy court. By May 2024, the sale was finalized to Gruhn and Matzke, paving the way for Backpack’s acquisition of FTX EU in June 2024.
The process reached a critical milestone in December 2024, when the Cyprus Securities and Exchange Commission (CySec) granted its approval following a rigorous due diligence process. Backpack emphasized that CySec’s green light underscored the regulatory legitimacy of the ownership transfer, asserting that the FTX estate is obligated to complete the share transfer as per the court-approved agreement. However, FTX EU's former owner, Gruhn, stated that despite informing the FTX estate about CySec’s approval, his legal team received no response from the estate.
Complicating the matter further, a Bloomberg report revealed the FTX estate’s position, claiming that “100% of the share capital of FTX EU is held by FTX Europe AG,” a subsidiary of FTX. This stance suggests that the transfer to Gruhn and Matzke remains incomplete, creating a contentious dispute over the chain of ownership.
Despite these challenges, Backpack reassured former FTX EU customers of its unwavering commitment to returning their funds, noting that the FTX estate bears no financial liability in this regard. The exchange expressed optimism about finalizing the transfer and promptly beginning fund redistribution to FTX EU customers once the process concludes.
Backpack has also outlined its plans to rebrand FTX EU under the Backpack brand. Once the transfer is finalized, FTX EU will operate as Backpack EU, with a launch scheduled for Q1 2025. The revamped platform will cater to European customers, offering a suite of cryptocurrency derivatives, including perpetual futures.
The acquisition and rebranding efforts are set against the backdrop of FTX’s dramatic downfall. In November 2024, the U.S. Department of Justice filed a civil forfeiture complaint to seize $16 million in cryptocurrency from a Binance account linked to former FTX CEO Sam Bankman-Fried. The funds were alleged to be part of a $40 million bribe in 2021 to unfreeze $1 billion in assets on Chinese exchanges. Bankman-Fried, now serving a 25-year prison sentence for fraud, is appealing his conviction, further underscoring the ripple effects of FTX's collapse.
This article has been refined and enhanced by ChatGPT.
