FTX Issues Clarification on Backpack’s Acquisition and Fund Repayment Claims

Bankrupt cryptocurrency exchange FTX has responded to recent claims by Backpack regarding the acquisition of its European arm, FTX EU, and the repayment of customer funds.

In a statement released on January 8, the failed crypto firm clarified that the U.S. Bankruptcy Court has not approved the sale of FTX EU to Backpack, nor has it been authorized to manage fund distributions to creditors.

Misleading Statement

On January 7, global crypto-trading platform Backpack announced through social media that it had acquired FTX EU and would handle creditor repayments for European customers as part of a court-approved bankruptcy process. Further, founder Armani Ferrante emphasized that the firm was committed to working with all relevant parties to prioritize the return of customer funds in the bloc.

With a presence in over 150 countries, the exchange also claimed that the acquisition had received approval from the Cyprus Securities and Exchange Commission (CySEC) with plans to expand through crypto derivative services such as spot, margin, and futures trading across the EU.

However, FTX denied these claims, stating that Backpack’s press release and related website contained multiple potentially misleading information. It clarified that its subsidiary, FTX Europe AG, still holds 100% of the share capital of FTX EU.

The company also said that although a prior agreement was made under court supervision to transfer FTX EU shares to former insiders of FTX Europe, this transfer has not yet occurred. It claimed that the indirect transfer of the former to Backpack, arranged by these insiders, was done without its knowledge or the court’s approval.

Backpack Has No Role in Fund Redistribution

Further, the statement stressed that Backpack has no authorization to make distributions to any creditors or customers, including former European clients. The defunct exchange reiterated that FTX EU itself remains solely responsible for returning funds to its customers.

“FTX will not be responsible for the repayment of any funds owed by FTX EU to its former customers and expressly disclaims any responsibility for such repayment by FTX EU,” read the disclosure.

It also explained that the amounts owed by its subsidiary to its customers have also not been determined by the relevant entities.

In a related update, the outfit confirmed the effectiveness of its Chapter 11 plan of reorganization on January 3, 2025, with an initial distribution record date set for the same day. Pending regulatory compliance, distributions to convenience class claimants are expected within 60 days.

Elsewhere, on January 2, another troubled crypto firm, Celsius, filed an appeal challenging a previous ruling that had dismissed its $444 million claim against FTX. The defunct crypto lender had claimed that FTX officials had undermined its reputation, making “unsubstantiated and disparaging statements” that contributed to its downfall in 2022, asking for up to $2 billion in damages.