Navigating the complexities of the cryptocurrency market can often be a daunting task. The landscape evolves rapidly, with trading platforms frequently emerging, merging, and sometimes vanishing. Recently, a key development has transpired that might influence the European market substantially. Backpack Exchange, a well-established crypto trading platform conceived by ex-employees of FTX and Alameda Research, has successfully procured the European operations of defunct exchange FTX for a hefty sum of $32.7 million. The move, announced by Bloomberg, aims to enhance Backpack’s derivatives offerings within an area where regulated crypto derivatives markets are becoming increasingly popular.
Aftermath of FTX EU’s Bankruptcy
FTX EU was one segment of several that went insolvent after the dissolving of the main exchange in 2022. Backpack, which operates from Dubai, as part of the procurement deal, is now tasked with managing the court-sanctioned bankruptcy claims amounting to roughly €53 million ($55 million). These funds are meant for disbursement among the affected customers of FTX EU.
Previously, the FTX estate initiated legal proceedings to retrieve millions from the original proprietors of FTX EU. However, this lawsuit was dismissed in a settlement that enabled the sale of the unit to co-founders Patrick Gruhn and Robin Matzke, who then transferred it to Backpack. This turn of events is significant as FTX EU owns a MiFID II license, facilitating crypto derivatives trading within the European Union. The transaction has been endorsed by the Cyprus Securities and Exchange Commission, giving the green light to Backpack for lawful operations within the region.
Armani Ferrante, Backpack’s CEO, after the acquisition, has stated that their foremost concern is to return the funds to the customers. He went on record saying, “We will not serve a single user, not serving a single trade in the EU until we have the ability to return customers’ funds.”
Backpack Exchange: An Emerging Force in Crypto Trading?
Backpack, established in 2022, has already created a splash within the industry, thanks to its high-profile team. Ferrante, an Alameda Research veteran, was instrumental in the development of the Solana blockchain. Co-founder Tristan Yver also hails from FTX. Armed with a virtual-asset service provider license in Dubai, Backpack is currently aiming for a license in Japan. They managed to raise $17 million last year with a notable valuation of $120 million.
With the acquisition of FTX EU, Backpack is strategically positioned to offer regulated crypto derivatives products, such as perpetual swaps – futures contracts without expiration, across the European Union. The regulated crypto derivatives market in Europe has seen heightened interest from various crypto firms as portrayed by Coinbase Global Inc.’s recent procurement of a Cyprus-based brokerage unit, which also bagged a MiFID II license.
Ferrante voiced his excitement at the prospect of reintegrating crypto derivatives trading in the EU, saying, “Derivatives make up an enormous amount of crypto trading volume.” As the market matures, entities like Backpack are set to significantly influence the future of crypto trading by providing inventive and regulated products that cater to the rising demand.
FTT, the native token of the defunct exchange, saw a downward trend with its price standing at $3, mirroring the wider market correction which saw a near 11% drop.
FAQs
What is the significance of the FTX EU acquisition by Backpack?
The acquisition allows Backpack, equipped with a MiFID II license, to offer regulated crypto derivatives products within the European Union. This development could potentially reshape the future of crypto trading in Europe.
What is Backpack’s objective following the acquisition?
Backpack’s CEO, Armani Ferrante, has stated that their priority is returning the funds owed to the customers of FTX EU. They pledge not to commence operations before they have the capacity to return these funds.
What are perpetual swaps?
Perpetual swaps are a type of futures contract in the crypto trading market that does not have an expiry date. This allows traders to hold onto a position as long as they want.
What is the current status of FTT, the native token of the defunct exchange?
FTT’s price is currently trending downwards, trading at $3. This dip follows a nearly 11% drop in the broader market.
