FTX EU Acquisition Sparks Dispute Between Backpack and Bankruptcy Estate

Highlights:

• The FTX bankruptcy estate disputes the FTX EU acquisition of Backpack, calling it unauthorized.
• Backpack claims CySec approved the sale, but the U.S. court has not authorized the transfer.
• FTX emphasizes creditor claims must follow court-supervised processes, disputing Backpack’s plans for fund distribution.

The FTX bankruptcy estate has challenged a report that claimed that crypto firm Backpack had acquired FTX EU. Backpack disclosed the acquisition on the 8th of January 2025, stating that the acquisition had been approved by the Cyprus Securities and Exchange Commission (CySec). Nevertheless, the FTX bankruptcy estate claims that the sale was unauthorized, thus creating uncertainty about the FTX EU future.

🚨JUST IN: FTX SAYS BANKRUPTCY COURT HAS NOT APPROVED BACKPACK EXCHANGE’S PURCHASE OF FTX EU

— BSCN Headlines (@BSCNheadlines) January 9, 2025

Backpack, a company started by ex-FTX employees, said that the acquisition adhered to the laws of Cyprus. According to Backpack, CySec approved the deal in December 2024. However, FTX noted that the United States Bankruptcy Court that oversees the bankruptcy of FTX did not approve the sale.

The bankruptcy estate also challenged Backpack’s power to control the funds or make payments to FTX EU customers. FTX highlighted that all creditors’ claims have to be submitted through the court procedure to protect the rights of all creditors.

Bankruptcy Court Oversight and Disputed Claims

The FTX bankruptcy estate has legal control over all FTX assets, including its European unit. This was because any effort made to go around the court in the implementation of its creditor repayment plans is unlawful. The estate claimed that the sale of the FTX EU shares happened without its approval and its knowledge.

As stated by FTX, the original order provided that FTX EU shares would be repurchased by the FTX insiders under the supervision of the court. However, it says that the insiders orchestrated an indirect transfer of the funds to Backpack without the necessary approval. FTX also called out Backpack for misleading information on the acquisition and fund recovery.

Backpack has reportedly acquired FTX EU for $32.7 million and the firm has also acquired the Cyprus Investment Firm (CIF) license. This license enables the provision of crypto derivatives services in the entire European region. Backpack will employ the license to offer its derivatives product in 2025. However, CySec further suspended the license of FTX EU until May 2025, thus, postponing the launch.

FTX has accused Backpack of posting material information about the acquisition that may have created confusion. The estate said it had not assessed or endorsed Backpack’s website or letters concerning the recovery of assets for former FTX EU clients.

Backpack Defends Legitimacy of FTX EU Acquisition

Backpack maintained that the acquisition was in accordance with all the law and regulation provisions. CEO Armani Ferrante added that the company acquired the FTX EU from the original founders of the company and not from the bankruptcy estate. According to Ferrante, CySec approved the acquisition after rigorously assessing and scrutinizing the deal for one year.

I have an enormous amount of appreciation for the FTX estate's commitment to maximizing customer returns, but my concern is that FTX EU customers may become confused here.

This is the series of events. All publicly verifiable.

– FTX EU was sold to its original founders and…

— Armani Ferrante (@armaniferrante) January 9, 2025

Backpack also announced that it participated in paying the obligations of FTX EU and handling customers’ claims, for example. It assured former FTX EU users that the fund distribution would remain separate from the bankruptcy estate. However, FTX noted that such moves may hinder the process of reorganization under the court’s supervision and cause new problems.

The FTX bankruptcy estate recently announced plans to pay out funds to creditors via proper channels. It pointed out that the court will hold all matters concerning FTX EU in abeyance until the subsidiary completes its sale under court supervision.