FTX Says Backpack Had No Right to Buy FTX EU

The recent acquisition of FTX EU by Backpack Exchange has sparked a significant dispute regarding ownership and approval. While Backpack claims to have completed the purchase, FTX's bankruptcy estate contests this assertion, stating that the acquisition has not been sanctioned by the court. This situation raises questions about the future of FTX's creditors and the regulatory landscape in Europe.

Key Takeaways

Backpack Exchange claims to have acquired FTX EU for $32.7 million.
FTX's bankruptcy estate disputes the validity of the acquisition, stating it has not been court-approved.
The acquisition aims to fill a gap in the European crypto market for regulated trading.
Backpack plans to launch operations in early 2025, pending resolution of the ownership dispute.

Background Of The Acquisition

Backpack Exchange, founded by former employees of FTX and Alameda Research, announced its acquisition of FTX EU, the European arm of the now-defunct FTX, for $32.7 million. This move is part of Backpack's strategy to expand its presence in the European market, which has seen many unregulated exchanges exit due to increasing regulatory scrutiny.

The acquisition was reportedly approved by the Cyprus Securities and Exchange Commission (CySEC) and the FTX bankruptcy court. However, FTX's estate has publicly stated that the acquisition has not been finalized and that Backpack has not been authorized to manage creditor repayments.

Dispute Over Ownership

FTX's bankruptcy estate asserts that the ownership of FTX EU remains with FTX Europe AG, a subsidiary of FTX, and that the transfer of shares to Backpack has not occurred. In a press release, FTX emphasized that all statements made by Backpack regarding the acquisition were done without their knowledge.

In contrast, Backpack claims that the sale to its co-founders was completed in May and that they have made payments to the FTX bankruptcy estate as per the purchase agreement. This conflicting narrative has led to confusion and uncertainty regarding the future of FTX's creditors and the operational status of FTX EU.

Implications For FTX Creditors

The ongoing dispute has significant implications for FTX creditors. Backpack has stated that it will handle repayments to FTX EU customers, but FTX's estate insists that it remains solely responsible for returning funds to former customers. This situation complicates the claims process for creditors, as they must navigate the conflicting claims of both parties.

Backpack's CEO, Armani Ferrante, has assured customers that they are working diligently to facilitate repayments, with plans to begin operations in early 2025. However, the timeline for these repayments remains uncertain, as it depends on the resolution of the ownership dispute and the cooperation of various stakeholders, including banks.

Future Outlook

As the situation unfolds, the cryptocurrency community is closely watching the developments surrounding the Backpack acquisition of FTX EU. The outcome of this dispute could set a precedent for future acquisitions in the crypto space, particularly in terms of regulatory compliance and creditor rights.

Backpack aims to position itself as a key player in the European market, leveraging FTX EU's MiFID II license to offer regulated crypto trading services. If successful, this acquisition could pave the way for a more transparent and secure trading environment in Europe, addressing the needs of an underserved market.

In conclusion, the battle over the ownership of FTX EU highlights the complexities of the cryptocurrency landscape, particularly in the wake of FTX's collapse. As both parties navigate this contentious situation, the future of FTX's creditors and the regulatory framework in Europe hangs in the balance.

Sources

FTX Disputes the Sale of EU Assets to Ex-Employees Is Complete, BNN Bloomberg.
Backpack Acquires FTX EU, Targets Europe’s Underserved Market, BeInCrypto.
Backpack Exchange Acquires FTX EU Amid Global Expansion Plan, CoinGape.
FTX says Backpack acquisition of EU arm has not been approved by court, Cointelegraph.