Seeking to strengthen its presence in the European market, Backpack Exchange, a cryptocurrency trading platform founded by former FTX employees Sam Bankman-Fried and Alameda Research, has acquired the European entity of the now-defunct FTX exchange for $32.7 million.
As before reported by Bloomberg, the acquisition aims to expand Backpack’s derivatives offering in a region where the regulated cryptocurrency derivatives market is gaining increasing popularity.
Transfer of FTX EU bankruptcy receivables
FTX EU was one of the entities that found itself in bankruptcy proceedings after the stock exchange collapse in 2022. As part of the acquisition transaction, Dubai Backpack will assume responsibility for the distribution of the court-approved products bankruptcy claims totaling approximately €53 million ($55 million) against affected FTX EU customers.
The FTX estate had previously taken legal action to recover millions from the original owners of FTX EU. However, that lawsuit was ultimately dismissed as part of a settlement that facilitated the sale of the unit to its co-founders, Patrick Gruhn and Robin Matzke, who then sold it to Backpack.
This acquisition is particularly noteworthy as FTX EU holds a MiFID II license to offer cryptocurrency derivatives trade within the European Union.
The transaction received approval from the Cyprus Securities and Exchange Commission, allowing Backpack to legally operate in the region.
Armani Ferrante, CEO of Backpack, stressed that refunding customers is the company’s “top priority” following the acquisition. In an interview, he stated: “We will not support a single user or a single transaction in the EU until we have the ability to refund customer funds.”
A rising cryptocurrency star?
Founded in 2022, Backpack has already made a name for itself in the industry. Ferrante, who previously worked at Alameda Research and played a key role in Solana’s development blockchainbrings valuable experience to the table.
Co-founder Tristan Yver also has experience as a former executive at FTX. Backpack obtained a virtual asset services provider license in Dubai and is currently seeking a license to operate in Japan, raising $17 million last year at a valuation of $120 million.
With the acquisition of FTX EU, Backpack can offer regulated cryptocurrency derivative products, including perpetual trading –futures contracts which do not expire – throughout the European Union.
The regulated cryptocurrency derivatives market in Europe is becoming increasingly attractive to various crypto companies, as evidenced by the recent acquisition by Coinbase Global Inc. brokerage unit in Cyprus, which also secured the MiFID II license.
“Derivatives represent a huge part of cryptocurrency trading volume,” Ferrante noted, expressing enthusiasm for the possibility of reintegrating cryptocurrency trading in the EU.
As the market evolves, companies like Backpack can play a key role in shaping the future of cryptocurrencies commercial offering pioneering and adjustable products that meet growing demand.
At the time of writing, FTT, the native token of the defunct exchange, is trading at $3, following a broader market correction with a decline of almost 11%.
Featured image from DALL-E, chart from TradingView.com
