FTX’s European branch, once at the heart of a major cryptocurrency scandal in 2022, has now been acquired by Backpack, a cryptocurrency exchange currently ranked 200th on CoinMarketCap by daily trading volume. Co-founder Tristan Yver, a former executive at FTX, is now at the helm of Backpack, which holds a virtual-asset service provider license from Dubai’s VARA. The company is also seeking regulatory approval to operate in Japan, following its $17 million fundraising last year that valued it at $120 million.
Despite its relatively modest ranking, Backpack plans to leverage the acquisition of FTX EU’s MiFID II-regulated license to expand its operations, although this expansion may not occur as swiftly as expected.
FTX EU has held a Cyprus Securities and Exchange Commission (CySEC) license since September 2022, allowing it to offer services across the European Union under MiFID II regulations. Backpack’s acquisition has received approval from both the bankruptcy court and CySEC. The exchange has ambitious plans for the European market, including the introduction of crypto derivatives and perpetual futures, which are currently unavailable through regulated local exchanges.
“As many international exchanges exit the European Union, becoming a MiFID II-licensed entity demonstrates our dedication to meeting the highest regulatory standards and is a significant step to bringing transparent, secure, and regulated crypto trading to an underserved European market,” said Armani Ferrante, CEO of Backpack Exchange.
FTX EU License Suspension Extended Until May 2025
However, the road ahead for Backpack is complicated by CySEC’s suspension of FTX’s license following its collapse, a suspension that has been repeatedly extended. The most recent extension was issued on November 5. Despite this, Backpack claims it is in the process of reactivating the license and plans to launch Backpack EU in Q1 2025. According to official CySEC documents, the suspension will last until May 30, 2025, extending into Q2. During this period, Backpack cannot offer investment services or accept new clients, though it is permitted to return funds to clients affected by the exchange’s collapse.
Backpack also assumes responsibility for settling FTX bankruptcy claims from former customers.
“Customer restitution is a crucial step to rebuild trust and confidence in the industry, and Backpack is committed to returning FTX EU customers’ funds as fast and as safely as possible,” Ferrante added.
Although not among the largest exchanges, Backpack raised $17 million in a Series A funding round earlier this year, reaching a total valuation of $120 million. The acquisition reportedly attracted interest from larger players like Coinbase in late 2023.
A Look Back at FTX’s Collapse
FTX’s dramatic collapse began in November 2022. The investigation revealed that Alameda Research, FTX’s sister trading firm, held a substantial portion of its assets in FTX’s own exchange token, FTT. This revelation led to a massive loss of customer confidence, culminating in a mass withdrawal of funds, an $8 billion shortfall in accounts, the blocking of customer withdrawals, and a Chapter 11 bankruptcy filing on November 11, 2022.
FTX founder Sam Bankman-Fried was convicted and sentenced to 25 years in prison for misappropriating $8 billion in customer deposits. John J. Ray III, who had previously managed the Enron bankruptcy, took over as CEO and revealed a “complete failure of corporate controls.”
In January 2024, FTX announced it would not restart operations but would instead liquidate assets to repay customers. A reorganization plan approved in October 2024 will allow 98% of creditors to recover 119% of their allowed claims from November 2022.
Before its collapse, FTX had established FTX Europe in March 2022, securing initial approval from CySEC and a full CIF license in September 2022.
