FTX says Backpack acquisition of EU arm has not been approved by court

Bankrupt crypto exchange FTX said the acquisition of its European arm FTX EU by crypto exchange Backpack has not been approved by the bankruptcy court, nor has Backpack been authorized to make distributions to FTX creditors.

Backpack announced that it had acquired FTX EU on Jan. 7, saying that it would take responsibility for creditor repayments to EU customers as part of the court-approved bankruptcy process.

Backpack founder Armani Ferrante said that his exchange would not “serve a single trade in the EU” until it was capable of paying back FTX creditors, adding that it would be ready to do so by as early as February. 

However, in a Jan. 8 statement, FTX said Backpack’s “purported” acquisition of FTX EU had not yet occurred and had not been approved by the US Bankruptcy Court for the District of Delaware, adding that all statements released by Backpack had been without the knowledge of FTX. 

“[Backpack’s] Press Release was issued without the knowledge or involvement of FTX.”

FTX said that FTX debtors had earlier agreed to sell FTX EU to “certain former insiders” of FTX Europe in connection with a settlement agreement under the supervision of the bankruptcy court. FTX added that it has now been informed that these former insiders had agreed to the indirect transfer of FTX EU to Backpack. 

“Neither FTX nor the US Bankruptcy Court was made aware of the indirect sale of FTX to Backpack prior to this week.”

FTX also noted that Backpack had not been given authority to manage creditor repayments.

“Backpack has not been authorized by FTX to make any distributions to any FTX customers or other creditors, including any former FTX customers,” said FTX. 

“FTX is solely responsible for the return of any funds it owes to former FTX customers.”

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In its announcement, Backpack said the acquisition would help expand its own footprint in Europe with FTX’s Markets in Financial Instruments Directive and Regulation (MiFID) II License.

Backpack was founded in 2022 by Solana developer Ferrante, who reportedly secured $20 million in funding from FTX and Jump Crypto to build the exchange. 

Another Backpack co-founder, Tristan Yver, spent at least two years with FTX before leaving the company in May 2022, according to his LinkedIn profile.

During FTX’s collapse in 2022, Backpack lost $14.5 million, or 88% of the company’s operating funds. The firm has since continued operations with minimal funding.

The reorganization plan for FTX took effect on Jan. 3, meaning that creditors will now begin receiving repayments. 

Customers need to have filed a claim through the official website to be eligible to receive reimbursement, which FTX said should happen within 60 days for the first group.

According to the FTX plan, an initial group of “convenience classes” will be the first to receive repayments, including users claiming $50,000 or less.

Cointelegraph contacted Backpack and FTX for comment but had not received a response by the time of publication. 

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