FTX claims that Backpack has not been authorized to refund customers in Europe, even though this exchange has stated that it will take over the responsibilities of FTX EU.
Controversy surrounding Backpack's acquisition of FTX EU
As Coin68 reported, Backpack has announced the acquisition of the European branch of the bankrupt exchange FTX and has committed to refunding money to creditors. According to Backpack, the transaction was approved by the Cyprus Securities and Exchange Commission (CySEC) in December 2024. Backpack also pledged to rename FTX EU to "Backpack EU" and take full responsibility for refunding customers.
However, just two days after Backpack's announcement, FTX issued a press release denying the legality of the transaction. FTX claims that the U.S. Bankruptcy Court in Delaware has never approved Backpack's acquisition of FTX EU.
The FTX Debtors today provided clarification on certain statements by Backpack relating to Backpack's purported acquisition of FTX EU. Read more here: https://t.co/WVwfNXBKRj
— FTX (@FTX_Official) January 8, 2025
Specifically, FTX stated:
- FTX only agreed to sell FTX EU to certain former executives of FTX EU in March 2024, under a court-approved settlement agreement.
- FTX only recently learned that these former executives had indirectly sold FTX EU to Backpack, and this information was disclosed only after Backpack announced it publicly.
FTX's press release further stated:
"Backpack is not authorized to make any distributions to customers or creditors of FTX, including former customers of FTX EU."
FTX also stated that they did not approve any information on the website posted by Backpack regarding the recovery of assets for former FTX EU customers. They emphasized that the funds related to FTX EU will be handled independently by FTX EU, not related to the FTX bankruptcy process.
According to the Coindesk news site, Backpack has also clarified the situation regarding the acquisition of FTX EU. The exchange said it acquired FTX EU in June 2024 from Patrick Gruhn and Robin Matzke, the co-founders of Digital Assets, the company acquired by Sam Bankman-Fried in 2021.
.@FTX_Official has disputed the sale of FTX EU to crypto exchange and wallet @Backpack, which was announced on Monday. By @IanAllison123.https://t.co/mu9PbbXX6C
— CoinDesk (@CoinDesk) January 9, 2025
Backpack emphasized that this transaction not only fully complies with legal requirements but also paves the way for the exchange to expand its presence in Europe, allowing it to provide tightly regulated Derivative services.
The former CEO of FTX EU, Patrick Gruhn, also provided more clarification on the responsibilities of the parties. Patrick Gruhn said that in May 2024, he had initiated the process of changing the control of FTX EU Ltd. with the Cyprus Securities and Exchange Commission (CySec). This was a mandatory step to transfer the company's shares. He stated:
"All legal procedures have been carried out transparently and in full compliance with regulations. The renaming of FTX EU to 'Backpack EU' is not just a simple name change, but also clearly demonstrates the transfer of responsibilities."
To better understand the timeline of events:
March 2024: FTX EU was sold to Patrick Gruhn and Robin Matzke, the co-founders of Digital Assets. This transaction was approved by the U.S. Bankruptcy Court with the condition of being "non-binding", meaning it was no longer directly related to the FTX bankruptcy process.
June 2024: Backpack proceeded to acquire FTX EU, but not from FTX, rather through Patrick Gruhn and Robin Matzke.
December 2024: The transaction was submitted to the Cyprus Securities and Exchange Commission (CySec), the financial regulatory authority, which subsequently approved the deal.
At the time of writing: Backpack has declared that it has taken control of FTX EU and is ready to handle all the debts of FTX EU to former customers.
Based on the information disclosed, the ownership and responsibility for handling the assets of FTX EU have been fully taken over by Backpack after the transaction was approved by CySec. However, there are still many unresolved issues, especially whether FTX or the U.S. Bankruptcy Court will officially approve this transaction.
Although Backpack has committed to handling the debts, the question arises as to whether there is any legal mechanism to ensure that Backpack will fully implement these commitments, or if this is simply a unilateral statement from Backpack when FTX has stated that Backpack has not been authorized to refund money to creditors.
Currently, the compensation plan for FTX customers and creditors has officially taken effect, with the first refunds to be implemented within 60 days from January 3, 2025 through two exchanges, Kraken and BitGo. The first round of refunds will prioritize creditors with claims under $50,000, accounting for more than 90% of the total number of creditors, and the distribution plan for the remaining creditors will be announced in the near future.
Compiled by Coin68
