Crypto Trading Platform Backpack Exchange Expands into Europe with Strategic Acquisition
In a significant move to bolster its presence in the European market, Backpack Exchange, a crypto trading platform founded by former employees of FTX and Alameda Research, has acquired the former European entity of the failed FTX exchange for a substantial $32.7 million. This strategic acquisition will enable Backpack to expand its derivatives offerings in the region.
A New Chapter for FTX EU
FTX EU, one of the business units that fell under bankruptcy after Sam Bankman-Fried’s firm collapsed in 2022, has been given a new lease of life. As part of the acquisition, Backpack will assume responsibility for distributing previously court-approved FTX bankruptcy claims of approximately €53 million ($55 million) to FTX EU customers.
Settling Outstanding Claims
The FTX estate had initially filed a lawsuit to claw back millions of dollars from the original owner of FTX EU. However, the lawsuit was eventually dropped as part of a settlement that included reselling the unit to FTX Europe’s co-founders Patrick Gruhn and Robin Matzke. Backpack subsequently bought the business from the co-founders.
MiFID II License: A Key Advantage
FTX EU holds a coveted MiFID II license, which allows the exchange to offer crypto derivatives trading in the European Union. The transaction was approved by the Cyprus Securities and Exchange Commission, according to Backpack.
Prioritizing Customer Funds
Armani Ferrante, CEO of Backpack, emphasized that the company’s top priority is to return customers’ funds as soon as February. “We will not serve a single user, not serve a single trade in the EU until we have the ability to return customers’ funds,” Ferrante stated in an interview. However, he acknowledged that other factors, including working with banks holding the funds, need to be considered.
Backpack’s Ambitious Plans
Founded in 2022, Backpack has already made significant strides. The company has secured a virtual-asset service provider license in Dubai and is seeking a license to serve the Japanese market. With a valuation of $120 million, Backpack raised $17 million last year.
A Focus on Regulated Crypto Derivatives
The acquisition will enable Backpack to offer regulated crypto derivatives products, including perpetual swaps, which are futures contracts that do not expire, in the European Union. The regulated crypto derivatives market in Europe has become a key focus area for many crypto firms, with Coinbase Global Inc. acquiring the Cyprus-based unit of brokerage firm BUX to secure a MiFID II license.
Unlocking Crypto Trading Volume
“Derivatives make up an enormous amount of crypto trading volume,” Ferrante noted. “And so we’re just really excited about the prospect of bringing crypto derivatives trading back in full force to the EU.” With this acquisition, Backpack is poised to tap into the vast potential of the European crypto derivatives market.
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