TLDR
- Backpack initially announced purchase of FTX EU for $32.7 million
- FTX quickly clarified no binding agreement was in place
- Backpack admitted deal wasn’t complete but denied misrepresentation
- The $32.7 million deal requires creditor and regulatory approval
- FTX EU holds valuable MiFID II license from Cyprus regulators
A premature announcement about the acquisition of FTX’s European division has led to a public clarification from both parties, revealing that the widely reported $32.7 million deal remains incomplete. The incident began when crypto wallet provider Backpack announced its purchase of FTX EU, only to have FTX quickly dispute the claim.
On Tuesday, Backpack made headlines by declaring it had acquired FTX EU for $32.7 million. The company presented the deal as a stepping stone for its expansion into European markets, highlighting the value of FTX EU’s regulatory licenses.
FTX responded within hours, issuing a statement that no binding agreement had been reached. The bankrupt cryptocurrency exchange emphasized that any potential sale would require approval from creditors and regulatory authorities before moving forward.
In response to FTX’s correction, Backpack released its own statement Wednesday, acknowledging that while the purchase wasn’t complete, the company had entered into good faith negotiations. Backpack maintained that it hadn’t misrepresented the situation, describing the announcement as reflective of ongoing discussions.
The disputed announcement highlighted the complex nature of bankruptcy-related acquisitions. FTX, currently navigating bankruptcy proceedings, must follow strict protocols for asset sales, including obtaining court approval and ensuring creditor interests are protected.
FTX EU holds particular appeal due to its MiFID II license from the Cyprus Securities and Exchange Commission. This license allows for regulated cryptocurrency trading operations within the European Union, making it a valuable asset for companies seeking to establish a presence in European markets.
The clarification from FTX emphasized the need for transparency in the sale process. The company stated that all transactions involving FTX EU must comply with applicable laws and prioritize creditor interests, suggesting multiple steps remain before any deal can be finalized.
Backpack’s statement defended its position, saying the announcement reflected genuine progress in negotiations. However, the company didn’t address specific concerns about regulatory approvals or the timeline for completing necessary requirements.
The proposed $32.7 million price tag represents just a fraction of FTX’s former valuation, reflecting the dramatic decline in the company’s fortunes since its collapse in late 2022. The sale of FTX EU would mark another step in the liquidation of FTX’s global assets.
Financial experts familiar with bankruptcy proceedings note that such deals typically require extensive documentation, regulatory clearance, and court approval. These requirements can extend the timeline for completing transactions, even when parties have reached preliminary agreements.
The Cyprus Securities and Exchange Commission’s involvement adds another layer of complexity to the potential deal. Any change in ownership of a licensed entity requires regulatory review and approval, a process that can take several months.
FTX’s creditors maintain a strong interest in maximizing recovery from asset sales. The company’s bankruptcy administrators must demonstrate that any sale price represents fair market value and serves the best interests of creditors.
Backpack’s interest in acquiring FTX EU aligns with broader industry trends of companies seeking to expand through acquisition of regulated entities. Obtaining licenses through acquisition can often prove faster than applying for new ones.
Both companies continue discussions, though neither has provided a timeline for reaching a binding agreement. The incident serves as a reminder of the structured processes required in bankruptcy-related sales.
The most recent development saw Backpack maintaining its commitment to pursuing the acquisition while acknowledging the preliminary nature of current agreements.
