Backpack Exchange Acquires FTX EU to Strengthen Crypto Expansion in Europe

Highlights:

• Backpack Exchange acquires FTX EU with approval from the bankruptcy court and CySEC.
• Crypto derivatives and SEPA integration plans aim to reshape European market offerings.
• FTX’s license suspension delays Backpack EU launch, but fund distribution continues.

Global crypto exchange Backpack Exchange said it had acquired FTX EU, the European arm of the defunct crypto exchange that infamously collapsed in late 2022. The acquisition is followed by approval from the FTX bankruptcy court and the Cyprus Securities and Exchange Commission (CySEC). As part of the deal, Backpack EU will oversee the distribution of funds to FTX EU customers.

The exchange has ambitious plans. It aims to introduce crypto derivatives and perpetual futures to the European market. These products are currently unavailable through regulated exchanges in the region. The company also aims to integrate payment systems within the Single Euro Payment Area (SEPA). SEPA allows individuals and businesses in EU countries to transfer funds easily using a single account.

Backpack is a crypto exchange and digital wallet platform established by ex-employees of FTX and Alameda Research. In early last year, it was valued at $120 million during its Series A financing round. The exchange acquired a Markets in Financial Instruments Directive (MiFID) II license to support its global expansion and offerings across the EU. Previously, the firm secured a key license from the Dubai Virtual Assets Regulatory Authority.

Backpack has acquired FTX EU and its MiFID II License.

Our first priority is to return all customer EURO funds on behalf of the FTX estate, followed by rolling out a full suite of spot, margin, and futures trading products.

Crypto perps trading is coming back to Europe 🇪🇺 pic.twitter.com/ExxYFufZHj

— Backpack 🎒 (@Backpack) January 7, 2025

Armani Ferrante, CEO of Backpack Exchange, highlighted many international exchanges are leaving the European Union. He said becoming a MiFID II-licensed entity reflects the company’s commitment to top regulatory standards. He also noted that this milestone is crucial for providing transparent, secure, and regulated crypto trading to the underserved European market.

FTX License Suspension Challenges Backpack Exchange’s European Plans

The challenge stems from CySEC suspending FTX’s license following its collapse. The suspension has been regularly renewed. CySEC issued the most recent extension of the Cyprus Investment Firm (CIF) license suspension on November 5. Backpack said the license reactivation is underway. It plans to launch Backpack EU in Q1. 

However, official CySEC documents show the suspension will last until May 30 this year, extending into Q2. During this period, the company cannot offer investment services or accept new clients. The regulator only allows returning funds to affected clients.

Ferrante added:

“Customer restitution is a crucial step to rebuild trust and confidence in the industry, and Backpack is committed to returning FTX EU customers’ funds as fast and as safely as possible.”

FTX Bankruptcy and Fund Distribution

FTX filed for bankruptcy in November 2022. In November 2023, authorities convicted Sam Bankman-Fried, FTX’s founder, and sentenced him to 25 years for misappropriating $8 billion in customer deposits. John J. Ray III, famous for overseeing Enron’s bankruptcy, assumed the CEO role.

On January 3, FTX initiated fund distributions to creditors as part of its Chapter 11 restructuring plan. The FTX estate is responsible for handling the bankruptcy proceedings. They estimate that the total distribution will range between $14.7 billion and $16.5 billion.

The FTX Debtors Plan of Reorganization is effective today, January 3, 2025. Today is also the initial distribution record date for holders of allowed claims in the Plan's Convenience Classes. Separate record and payment dates for other classes of claims will be announced later.

— FTX (@FTX_Official) January 3, 2025