FTX EU Acquisition in Jeopardy? Backpack Does Not Have Court Approval

Bankrupt cryptocurrency exchange FTX clarified today (Thursday) that Backpack's "purported" acquisition of its Cyprus division has not been approved by the court, nor has Backpack been authorised to distribute funds to FTX customers.

Further, the press release stated, "The Backpack Press Release was issued without the knowledge or involvement of FTX,” and “a related website established by Backpack contains numerous potentially confusing statements regarding FTX EU, FTX, and the U.S. bankruptcy process.”

Confusion or Deliberate Misrepresentation?

FTX Debtors have already approved the acquisition of FTX EU by former insiders of that unit. However, the potential deal has not yet been approved by the court. These former insiders apparently agreed to sell ownership of FTX EU, which they do not legally own yet, to Backpack.

According to Coindesk, Backpack paid—or, as it now appears, only agreed to pay—$32.7 million to acquire FTX EU. The Cyprus unit of FTX holds a Cyprus Investment Firm (CIF) licence, and any entity acquiring it can offer derivatives instruments across the European Economic Area (EEA).

In its press release, Backpack mentioned plans to introduce crypto derivatives and perpetual futures to the European market under the Cyprus licence. It was planning to launch these regulated services in Europe in Q1 2025. However, the Cyprus Securities and Exchange Commission (CySEC) extended the suspension of the FTX EU licence until 30 May 2025.

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- Futures.
- Spot-margin.
- Borrow lend.
- Cross collateral.
- Cross margin.
- Auto lend.
- Auto realize.
- Yield on collateral.
- Yield on unrealized pnl.
- Yield on everything.

All inside your simple, isolated subaccount.

🧱

— Backpack 🎒 (@Backpack) January 4, 2025

Finance Magnates recently reported that Coinbase gained a similar MiFID II licence by acquiring the Cyprus unit of BUX. However, the crypto exchange is yet to announce its plans for that licence.

No Approval Yet

Although Backpack previously claimed that the acquisition had received approval from the bankruptcy court and CySEC, the latest clarification from FTX stated: “The U.S. Bankruptcy Court did not approve the acquisition of FTX EU by Backpack.”

Additionally, Backpack assumed responsibility for settling FTX bankruptcy claims from previous platform clients. However, FTX has now clarified that Backpack has not been authorised to handle any creditor repayments.

“FTX has not reviewed or approved a website established by Backpack regarding asset recovery for former FTX EU customers, nor reviewed or approved any other communications by Backpack,” the latest press release added.

“FTX expressly disclaims any responsibility for the accuracy or completeness of any information contained in Backpack's press release, website, or other communications released by Backpack, including with respect to the statements by Backpack highlighted above.”

Interestingly, Backpack received $20 million in funding from FTX and Jump Crypto after it was founded in 2022 by Solana developer Armani Ferrante and Tristan Yver, a former FTX employee. The exchange even lost $14.5 million, or 88% of its operating funds, following the FTX collapse.

Meanwhile, FTX administrators recently confirmed they will start distributing funds to investors who incurred losses through partner crypto firms, including Kraken and BitGo. The court has already approved the distribution plan.