FTX Denies Backpack's Acquisition of FTX EU: What You Need to Know

FTX Clarifies Acquisition Status of European Arm by Backpack

In a recent development, bankrupt cryptocurrency exchange FTX has responded to claims made by Solana-based exchange Backpack regarding the acquisition of FTX EU, clarifying that no approval from the U.S. Bankruptcy Court for the District of Delaware has been granted for this transaction.

Backpack’s Claims and FTX's Response

On January 7, Backpack announced its acquisition of FTX EU, stating intentions to manage creditor repayments for EU customers. However, FTX countered this announcement with a statement on January 8, labeling the acquisition as "purported" and asserting that it has not received the necessary court approval.

FTX emphasized that Backpack issued their press release without prior knowledge or involvement from them. The exchange stated that its debtors had previously agreed to transfer FTX EU to select former insiders of FTX Europe as part of a court-supervised settlement. This transfer to Backpack occurred without proper notification to FTX or to the court.

The Implications for Creditor Repayments

Furthermore, FTX reinforced that Backpack lacks the authorization to manage any distributions to former FTX customers or creditors. The statement underscored FTX's continuous responsibility to facilitate the return of funds owed to creditors.

Backpack’s Strategic Plans Amid Financial Struggles

Backpack's founder, Armani Ferrante, indicated plans for the exchange to start creditor repayments by February 2025, asserting that trade operations within the EU would not commence until all creditor obligations are fulfilled. Despite the tumultuous backdrop of FTX’s collapse, Backpack proclaimed its acquisition as a strategic method to enhance its presence in the European market, leveraging FTX EU’s Markets in Financial Instruments Directive and Regulation (MiFID) II License.

Founded in 2022 with substantial backing of $20 million from FTX and Jump Crypto, Backpack faced hardships, reporting a loss of $14.5 million during FTX’s devastating collapse. Nevertheless, Backpack continues to operate, albeit under constrained resources.

FTX’s Reorganization Plan for Creditor Repayments

As part of its reorganization plan, which came into effect on January 3, 2025, FTX is poised to initiate repayments to creditors. Notably, customers with claims amounting to $50,000 or less, categorized as "convenience classes," will receive priority in the initial distribution anticipated within a 60-day window.

Eligible customers are advised to file their claims through FTX’s official website in order to facilitate the reimbursement process.

Conclusion

The ongoing situation with FTX and Backpack illustrates the complexities and challenges that often accompany bankruptcy proceedings in the cryptocurrency domain. As stakeholders navigate this developing narrative, the emphasis on transparency and regulatory compliance remains paramount for all parties involved.