Backpack Exchange and FTX Dispute Over FTX’s EU Ownership
The ownership dispute over FTX’s European Union operations has become increasingly prominent in recent discussions between Backpack Exchange and the FTX
Introduction
In a recent development, Backpack Exchange has addressed claims raised by the FTX Recovery Trust concerning the legality of its acquisition of FTX EU. The company, which operates under the name Digital Assets AG (DAAG), stated that it had acquired FTX EU in December 2024 after securing regulatory approval from the Cyprus Securities and Exchange Commission (CySEC). This follows a complex history involving FTX’s collapse and subsequent legal disputes.
Background on FTX EU
Original Acquisition
FTX EU, initially known as Digital Assets AG (DAAG), was acquired by FTX in 2021 for $323 million. Following the collapse of FTX in November 2022, the subsidiary became entangled in the parent company’s bankruptcy proceedings.
Subsequent Sale
In February 2024, FTX EU was sold back to DAAG co-founders Patrick Gruhn and Robin Matzke for $32.7 million as part of a court-approved settlement aimed at maximizing creditor returns. This transfer concluded in May 2024.
Backpack Exchange’s Acquisition Claims
In June 2024, Backpack Exchange claimed it had acquired FTX EU through a deal with the co-founders. The company, which operates under the name Digital Assets AG (DAAG), stated that it was pursuing this acquisition as part of its broader expansion strategy. However, the sale back of FTX EU to Gruhn and Matzke in 2024 complicated Backpack’s claims.
Dispute over Share Management
Current Ownership Structure
The ownership structure of FTX EU remains a subject of legal dispute. According to the FTX Recovery Trust, current owners include FTX bankruptcy trustee George Gkikas and FTX parent company Liquid. These individuals control approximately 67% of the voting power in FTX EU.
Management Control Controversy
The FTX Recovery Trust alleges that Backpack Exchange is not the true owner of FTX EU but merely a shell company used to facilitate Gruhn and Matzke’s return to power. This interpretation stems from the sale back of FTX EU shares to these individuals in 2024.
Legal Dispute on Creditor Repayments
The Payment Plan
The sale back of FTX EU to Gruhn and Matzke in May 2024 was part of a payment plan designed to satisfy FTX’s creditors. This settlement, however, has raised concerns about the company’s financial health.
Impact on Creditor Responsibilities
The current ownership structure has led to questions about who is responsible for repaying FTX’s creditors. The FTX Recovery Trust asserts that Gruhn and Matzke are personally liable for any outstanding debts, while Backpack Exchange maintains that the company operates independently of these individuals.
Reputational Impact on Backpack Exchange
FTX’s collapse has had a ripple effect beyond its core business operations. The current ownership structure has cast doubt on Backpack Exchange’s status as an independent entity and has raised questions about its ability to manage FTX EU effectively.
Reaction from Industry Experts
Sunil Kavuri’s Statement
Sunil Kavuri, a prominent crypto industry watcher, expressed his views on the matter during a recent interview. He stated that Backpack Exchange’s acquisition of FTX EU is a significant point of contention in the ongoing legal disputes surrounding FTX’s operations.
Conclusion
The legal dispute over Backpack Exchange’s ownership and responsibility for FTX EU remains unresolved. This uncertainty has implications beyond the immediate acquisition, affecting the company’s standing in the crypto industry.
