Backpack Buys FTX EU, Unlocks European Crypto Futures for 110K Users
Backpack, a prominent crypto wallet and exchange particularly popular within the Solana ecosystem, has finalized its acquisition of FTX EU for $32.7 million. This strategic move not only grants Backpack access to over 110,000 former FTX EU users but also secures a crucial European regulatory license, paving the way for the platform to offer perpetual futures trading in Europe.
The acquisition, officially signed in April 2024, underwent an extensive eight-month due diligence process with regulatory bodies, according to Backpack CEO Armani Ferrante. This acquisition places Backpack in the position of managing the distribution of bankruptcy claims to former FTX EU customers, a significant responsibility the company has embraced.
The connection between Backpack and FTX runs deeper than just this acquisition. Several key figures at Backpack have previous ties to FTX and Alameda Research, adding an intriguing layer to the deal. Notably, Ferrante himself worked at Alameda Research, while Backpack Wallet co-founder Tristan Yver previously served as Head of Strategy at FTX US. This shared history has prompted Backpack to frame the acquisition as a means to expedite the return of funds to affected users. As Ferrante stated, "FTX EU users have been waiting for their distribution for too long. We believed that we could do it faster and more efficiently.”
While the absence of FTX staff and proprietary technology might raise initial questions, the true value of the acquisition lies in FTX EU's MiFID II license. This license allows Backpack to offer a range of trading services, including the highly sought-after perpetual futures trading, within the European market. Securing the reactivation of this license, which was suspended following FTX's collapse, was a key factor in the extended timeframe for finalizing the deal.
The European market represents a significant opportunity for Backpack. As Ferrante explained, Europe is a major hub for trading, with a substantial portion of crypto trading volume concentrated in perpetual futures. Currently, there are no fully compliant crypto perpetual futures offerings available within the European Union, making this a prime opportunity for Backpack to capture a significant market share. This move puts Backpack in direct competition with established players like Coinbase, which also holds an EU MiFID II entity and has expressed intentions to expand its derivatives offerings in the region. This acquisition follows a precedent set by the post-collapse sale of FTX's LedgerX derivatives platform in 2023, further highlighting the value of these licenses.
This strategic acquisition by Backpack not only provides a potential solution for former FTX EU users awaiting their funds but also positions the company for significant growth within the European crypto market. By obtaining the MiFID II license, Backpack is poised to become a key player in the European derivatives landscape, offering a much-needed compliant platform for perpetual futures trading.