Backpack, a cryptocurrency exchange founded by former employees of FTX and Alameda Research, has acquired the European arm of the now-defunct FTX, FTX EU, in a deal valued at $32.7 million.
The acquisition, confirmed by both the bankruptcy court and the Cyprus Securities and Exchange Commission (CySEC), signals the beginning of Backpack's European expansion.
FTX EU, which previously held a MiFID II licence under CySEC, was considered a valuable asset despite the turbulent history surrounding the FTX brand.
With the acquisition of FTX EU, Backpack plans to take advantage of its newly acquired MiFID II licence to offer a range of crypto derivatives in the European market.
This includes becoming the only regulated provider of perpetual futures across the European Union, a much-awaited addition to the market.
Armani Ferrante, CEO of Backpack Exchange, expressed optimism about the company’s prospects, stating,
"Becoming a MiFID II-licensed entity demonstrates our dedication to meeting the highest regulatory standards and is a significant step to bringing transparent, secure, and regulated crypto trading to an underserved European market."
Armani Ferrante, CEO of Backpack Exchange, is a former developer at Alameda Research.
Despite the acquisition, significant challenges remain for Backpack, particularly concerning FTX EU’s licence suspension.
Since FTX's collapse in 2022, CySEC has regularly renewed the suspension of the exchange’s licence, with the most recent extension issued on 5 November 2024, lasting until 30 May 2025.
During this period, Backpack will be unable to offer new services or accept new clients, limiting its immediate impact.
CySEC's suspension currently allows only the return of funds to clients who were affected by the FTX fallout.
Backpack has assured that the process of reactivating the licence is underway and has committed to returning FTX EU customers’ funds as quickly and securely as possible.
Ferrante further added,
"Customer restitution is a crucial step to rebuild trust and confidence in the industry."
Backpack’s ambitious plans include launching its services by Q1 2025, once it receives the necessary approval from CySEC.
The exchange aims to be a leader in the European crypto derivatives market, particularly by introducing perpetual futures, a product that is currently not available through regulated exchanges in Europe.
While some other exchanges, like Coinbase and Bitstamp, have also received MiFID II licences, Backpack's focus on launching perpetual futures puts it in a unique position.
Ferrante noted,
“Even though a few firms have been able to acquire approval for a limited form of a derivatives license, we’re not aware of any players that currently offer perpetuals and are live in the EU, including Coinbase and Bitstamp.”
Though Backpack ranks only 200th in terms of daily trading volume on CoinMarketCap, the exchange has been steadily building its reputation.
The company raised $17 million in a Series A funding round in 2024, bringing its valuation to $120 million.
Backpack's acquisition of FTX EU signals its intent to compete with larger players in the crypto industry.
The deal even attracted interest from Coinbase in late 2023, highlighting the significance of this acquisition.
The reorganisation plan for FTX’s bankruptcy, approved in October 2024, aims to return 119% of creditors’ claims, benefiting 98% of creditors.
However, despite these efforts, it remains to be seen how the broader crypto industry will react to Backpack's efforts to revive FTX EU and expand in the European market.
With the scars of FTX's collapse still fresh, Backpack's commitment to restoring customer funds and offering regulated products is crucial.
The exchange's dedication to rebuilding confidence in the crypto sector could have far-reaching implications, especially as Europe continues to push for clearer regulatory frameworks with the introduction of MiCA (Markets in Crypto Assets).
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