FTX Unaware of Backpack’s $32.7M Purchase of EU Arm

FTX, the defunct cryptocurrency exchange, has released an official statement to recent claims from Backpack entities about their alleged acquisition of FTX EU.

FTX clarified that it had no prior knowledge of Backpack Exchange’s January 7 announcement, asserting that the statement was made without its involvement. The exchange further emphasized that Backpack’s press release contained several inaccuracies that could confuse stakeholders.

It reiterated that FTX Europe AG, a subsidiary of FTX, retains 100% ownership of FTX EU’s share capital. While there had been prior discussions about selling FTX EU to former FTX Europe insiders as part of a settlement, the U.S. Bankruptcy Court handling the Chapter 11 proceedings has yet to approve any transfer.

Additionally, FTX stated it had no knowledge of any indirect sale of FTX EU shares to Backpack prior to this week.

FTX clarified that Backpack is not involved in the U.S. Bankruptcy Court-approved process for reimbursing creditors, including former customers of FTX EU. The exchange stressed that FTX EU is solely responsible for identifying and returning any funds owed to its customers.

According to the court’s Chapter 11 plan, the organization is not authorized to make distributions to creditors or former customers.

The estate distanced itself from any obligations to FTX EU’s customers, asserting that any outstanding amounts owed would be evaluated exclusively by FTX EU after its sale, rather than by FTX or the Bankruptcy Court.

Backpack Clarifies Purchase

On January 9, Backpack responded to FTX’s statement. “Backpack recognizes that the sale of FTX’s European assets is a complex process and appreciates the FTX bankruptcy estate for their commitment to clarity and maximizing customer return,” the exchange stated.

In early 2024, FTX initiated the sale of several European assets, including FTX EU, to former insiders. The transaction was approved by the FTX bankruptcy court in March 2024 and finalized in May 2024, with payments made to the FTX bankruptcy estate as per the agreed terms.

Shortly after, Backpack acquired the same European assets from these insiders. The sale was completed and officially recorded in German court documents, becoming publicly available in June 2024.

The transfer of FTX EU required regulatory approval from CySec. In December 2024, CySec approved Backpack’s acquisition after a thorough due diligence process.

Could Ownership Have Caused The Confusion?

Following FTX’s bankruptcy filing in November 2022, a new management team, known as the “restructuring team,” was brought in to manage the company’s bankruptcy process.

The restructuring team is headed by John J. Ray III, a seasoned bankruptcy expert appointed as the new CEO to oversee FTX’s affairs and guide its transition. Ray, who had previously managed the liquidation of Enron, was chosen for his extensive experience in handling complex bankruptcy cases.

FTX may have been blindsided by Backpack’s purchase for several reasons, including poor management, lack of transparency, complex ownership structures, and other contributing factors.

The situation takes on an additional layer of complexity with the revelation that the founder of Backpack, Armani Ferrante, is a former FTX executive who served as the company’s Chief Product Officer (CPO). This connection raises questions about potential ties between the two entities and adds intrigue to the unfolding developments.

Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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