FTX and Backpack publicly clash
Cryptocurrency exchange FTX and emerging platform Backpack have recently sparked a public dispute over 'who exactly FTX Europe (hereinafter referred to as FTX EU) was sold to.' FTX issued a statement on January 8, questioning Backpack's claim of 'successfully acquiring FTX EU and quickly returning assets to European users,' arguing that the transaction had not been approved by the bankruptcy court and that Backpack had no authorization to distribute funds to former FTX EU customers. This move has once again made FTX, which is already undergoing bankruptcy proceedings, a focal point in the market, leaving European users confused.
Further reading
Backpack acquires FTX EU! Becomes a compliant platform in the EU and will assist European users in compensating for assets
Source: PR Newswire FTX issued a statement questioning the legitimacy of Backpack's acquisition of FTX EU
The core point of contention for both parties lies in the 'timing of the acquisition'
Looking back at the context of the events, FTX EU is FTX's subsidiary in Europe and possesses an EU MiFID II financial license. FTX stated in a statement that as of now, FTX Europe AG still holds 100% of FTX EU's shares, and the court has only approved FTX to sell its European assets to 'specific former insiders,' not Backpack.
FTX pointed out that it only learned recently that 'the former insider had indirectly transferred FTX EU to Backpack,' and this secondary transaction was not reported to FTX, nor was it approved by the U.S. bankruptcy court.
In response, (Crypto City) sought an official reply from Backpack, which stated that FTX had sold its European business to the original management of FTX Europe as early as the beginning of 2024, 'and the court has approved this transaction.' Subsequently, Backpack acquired FTX EU from these management personnel and has received approval from the Cyprus Securities and Exchange Commission (CySec).
'The entire transaction has been registered with the German public registration authority since mid-2024, not something that happened overnight.' Backpack further urged FTX 'to cooperate as soon as possible to complete the final equity transfer' so that Backpack can restart the asset refund process for European users.
The real parties involved: When can FTX EU users reclaim their assets?
Despite both parties insisting on their stance regarding 'whether the bankruptcy court recognizes Backpack as the acquirer,' European users are undoubtedly more concerned about whether they can smoothly reclaim their frozen assets.
FTX claims that 'it has not authorized Backpack to assist in the return of funds,' and the movement of assets should be the responsibility of FTX EU.
In contrast, Backpack emphasized that 'FTX EU has independent legal authority to handle customer funds after separating from FTX. After Backpack acquires the EU company, it will work to implement repayments.'
At present, it appears that if the equity transfer is accelerated, former FTX EU customers will be able to apply for fund refunds on the Backpack EU platform according to the process.
It is worth noting that the bankruptcy proceedings of FTX in the United States are still ongoing, and the advisory team has repeatedly emphasized that 'the compensation issues for European users are not within its jurisdiction.' This indicates that once the European business is confirmed to be transferred to Backpack, FTX will have no obligation or power to influence the refund arrangements.
Who can secure the compliance leadership in the EU?
In addition to dismantling the acquisition controversy, the greater significance of this case for the market is: 'Who can dominate the EU contract trading market.'
Due to MiCA regulations and various regulatory requirements, many exchanges have been forced to withdraw from the European derivatives market, leaving very few compliant players. Backpack hoped to leverage the acquisition of FTX EU's MiFID II license to become 'the only compliant perpetual contract trading platform in Europe.' If this plan succeeds, Backpack will enjoy a natural market advantage.
However, at present, when the transaction details are still under review by the court and regulatory bodies, there are significant disagreements between FTX and Backpack regarding the legality and validity of Backpack's acquisition, as well as when it will officially take place. For European users, the most immediate concern is how to quickly withdraw their assets. For the entire market, it is about who can capture the crypto derivatives market. This 'FTX EU acquisition case, which originally seemed settled,' may require further observation of the subsequent negotiations among all parties to determine the final direction.
'Who exactly did FTX EU sell to? FTX questions the acquisition, Backpack: The EU was already sold' this article was first published in 'Crypto City'