Armani Ferrante and Tristan Yver, former FTX/Alameda employees, are breathing new life into their crypto venture, Backpack, after securing $17 million in funding. This latest investment, led by Placeholder VC and valuing Backpack at $120 million, marks a significant comeback for the company that faced financial difficulties following the collapse of FTX in 2022.
Rising from the Ashes: A Determined Comeback
Just two years ago, Backpack, then primarily a crypto wallet platform, struggled financially due to its association with FTX. However, through an innovative NFT-fueled fundraising strategy, where they sold “Mad Lads” NFTs and raised over $1.4 million, and the sale of their FTX deposits, they managed to secure the resources needed to stay afloat. This experience fueled their ambition to create a reliable exchange platform, filling the void left by FTX.
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Armani and I have always very strongly considered exchanges to be the largest onboarding point for people into crypto
Tristan Yver, Co-founder of Backpack wallet
Their nascent exchange product, launched in October 2023 after acquiring a virtual asset service provider (VASP) license from Dubai’s Virtual Assets Regulatory Authority (VARA), already boasts impressive daily trading volumes in the nine-figure range. This early success is particularly noteworthy considering they primarily cater to users from Asia, the Middle East, and the United States, regions traditionally undeserved by major Western exchanges.
A Blockchain-Inspired Approach
Backpack’s approach to record-keeping for transactions and trades mirrors blockchain systems, ensuring transparency and security against potential manipulation. This strategy aims to rebuild trust among users, specifically addressing concerns raised by FTX’s mismanagement of customer funds. Additionally, Backpack emphasizes user safety by employing a multi-signature wallet system and cold storage for a significant portion of its user funds.
Prior to securing external investments, Backpack relied on the proceeds from their unique “Mad Lads” NFT event, which not only raised capital but also attracted a dedicated user base of over 420,000 verified users globally, particularly on-chain traders and collectors. This user base has significantly contributed to the exchange’s current trading volume, exceeding $6.53 billion in February 2024.
Furthermore, Backpack’s ranking system based on trading activity fosters a competitive environment, potentially incentivizing increased trading. However, Yver advises against excessive trading solely for reward accumulation, emphasizing the importance of responsible trading practices.
Beyond the Wallet
With the recent funding, Backpack is poised for further growth and potential expansion beyond its current offerings as a wallet and exchange. This investment will allow them to address compliance and licensing costs associated with entering new jurisdictions, including plans for expansion into Europe and North America.
Additionally, they are exploring the possibility of offering new features like margin trading and staking services in the future.
The crypto landscape heavily relies on exchanges to facilitate user onboarding, and Backpack is well-positioned to address this need by offering a secure and reliable platform. Their innovative approach to data recording, inspired by blockchain technology, sets them apart from competitors and instills confidence in users.
They are also actively building relationships with other industry players, recently integrating with the Chainlink oracle network to access secure off-chain data feeds for their exchange.
A Secure and Transparent Future for Crypto
By combining the best elements of traditional financial exchanges with the decentralized nature of blockchains, Backpack is paving the way for a future where security and transparency are paramount in the crypto industry. As they navigate the rapidly evolving crypto market, Backpack, with its strong foundation, innovative approach, and industry backing, is poised to become a leading exchange platform, potentially shaping the future of user onboarding and facilitating secure participation in the crypto ecosystem for years to come.
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