Backpack announced on Tuesday that it has acquired FTX’s European arm, FTX EU, and will be responsible for distributing previously court-approved FTX bankruptcy claims following regulatory approval. However, FTX’s bankruptcy management has challenged this statement.
Response from FTX Bankruptcy Management
FTX bankruptcy management stated on Wednesday that Backpack’s announcement was made without their knowledge. They claimed that Backpack potentially used confusing language regarding FTX EU, FTX, and the U.S. bankruptcy process.
The U.S. Delaware Bankruptcy Court has not approved Backpack’s acquisition of FTX EU. It was also clarified that the transfer of FTX EU shares, owned by FTX Europe AG, to former FTX Europe employees has not yet occurred. The bankruptcy management emphasized that Backpack was not informed about the sale process and lacks the authority to make any payments to customers or creditors.
Backpack’s Reply
In response to the statements from FTX bankruptcy management, Backpack acknowledged the complexity of selling FTX’s European assets and expressed appreciation for the bankruptcy management’s efforts prioritizing customer payments. Backpack stated that FTX bankruptcy management sold the European assets, including FTX EU, to former employees in February 2024, which was approved by the court and completed in May 2024. They asserted that the acquisition of these assets occurred in June 2024 and is documented in German court records, with the transfer of FTX EU to Backpack happening in December 2024 following approval from the Cyprus Securities and Exchange Commission.
“Following regulatory approval, FTX bankruptcy management is required to transfer the shares per the court-approved sales contract,” Backpack said, adding that they will begin refunding FTX EU customers after the transfer. They indicated that FTX EU would be renamed Backpack EU, and the responsibility for payments to former FTX EU customers would entirely shift to Backpack EU.
For those unfamiliar, Backpack operates as a cryptocurrency exchange and digital wallet platform established by former FTX and Alameda employees. In early 2024, during its Series A funding round, the company was valued at $120 million. Backpack EU is expected to launch this quarter, providing cryptocurrency derivatives products.
Recall that FTX filed for bankruptcy in November 2022, and its former CEO, Sam Bankman-Fried, was found guilty of seven charges, including fraud, in November 2023, resulting in a 25-year prison sentence.
