In a surprising turn of events, the FTX bankruptcy estate has come out swinging against the recently announced acquisition of FTX EU by Backpack, a cryptocurrency exchange and wallet provider founded by former FTX and Alameda employees. The high-stakes dispute centers around the legitimacy of the deal and the right to distribute funds to FTX creditors and customers.
The Backpack Acquisition Bombshell
Backpack made waves on Monday with the announcement that it had purchased FTX’s European arm, FTX EU, from the company’s founders. The relatively unknown exchange boldly declared its intentions to reimburse FTX EU creditors and outlined ambitious plans to launch regulated crypto derivatives trading using the licenses obtained in the acquisition.
However, the FTX bankruptcy estate quickly fired back, asserting that the sale was completely unauthorized. In a scathing statement, FTX representatives declared:
Backpack has no involvement whatsoever in the U.S. Bankruptcy Court-approved process for returning funds to any FTX customers and other creditors.
Backpack has not been authorized by FTX to make any distributions to any FTX customers or other creditors, including any former FTX EU customers.
– FTX Bankruptcy Estate
Backpack’s Side of the Story
Caught off guard by the forceful rebuke, Backpack quickly sought to clarify the situation. The company maintained that it had properly purchased FTX EU from its founders back in June 2024, following court approval of the sale in March.
Most importantly, Backpack emphasized that the acquisition had been thoroughly vetted and greenlit by CySEC, the Cyprus financial regulator, in December 2024. The company stated:
As a licensed entity, the transfer of the FTX EU entity was subject to regulatory approval by CySEC. In December 2024, CySEC approved Backpack’s purchase following a lengthy diligence process.
– Backpack Exchange
With the regulatory stamp of approval secured, Backpack asserted that the FTX estate is now obligated to transfer the shares as outlined in the court-sanctioned sales agreement. The exchange eagerly awaits the completion of this transfer so it can commence the process of returning funds to wronged FTX EU customers, a goal it claims to share with the bankruptcy estate.
The Plot Thickens
Amidst the heated back-and-forth, FTX EU’s former chief Patrick Gruhn shed additional light on the complex situation. Gruhn revealed that he had kicked off a change of control proceeding with CySEC back in May 2024, a necessary step to transfer the regulated company’s shares.
While acknowledging the intricacies of the massive FTX bankruptcy case, Gruhn suggested that the estate’s fiery response aimed to distance itself from Backpack and clarify that it would not be distributing any US bankruptcy funds through the deal.
However, Gruhn confirmed that FTX EU will indeed be rebranded as Backpack EU and will be responsible for returning the old FTX EU customer funds under its new banner. A small ray of hope for the exchange’s jilted European users.
The Tangled Web of Crypto Bankruptcy
This explosive development underscores the immense complexity of unwinding a failed crypto empire like FTX. With countless legal entities spanning the globe and billions in customer assets on the line, every move is heavily scrutinized and hotly contested.
The Backpack acquisition of FTX EU is now at the center of this tangled web, with both sides asserting the legitimacy of their positions. At stake is not only the ownership of valuable European crypto licenses, but the fate of countless customer funds hanging in the balance.
As the controversy rages on, all eyes will be on the courts and regulators to provide clarity and direction. The crypto community eagerly awaits the resolution of this high-stakes battle, hoping that wronged customers will finally see some form of resolution.
But one thing is certain: the winding path of the FTX bankruptcy is far from over. With new twists and turns emerging at every corner, it’s clear that the fallout from this historic collapse will continue to reverberate throughout the industry for years to come.
As the dust settles on the Backpack-FTX EU bombshell, the crypto world braces for the next shocking revelation. In an industry where the only constant is change, one can only wonder what other surprises lay in store as this saga unfolds.
