FTX didn’t know Backpack bought its EU arm
We’re talking about FTX here, so we could have anticipated that things wouldn’t go as smoothly as planned
ARTEMENKO VALENTYN/Shutterstock modified by Blockworks
This is a segment from the Lightspeed newsletter. To read full editions, subscribe.
On Tuesday, we reported that Backpack had purchased FTX EU in a $32.7 million deal. The next day, FTX put out a statement clarifying Backpack’s announcement. Then in a press release of its own, Backpack clarified FTX’s clarification.
This is how companies fight, I guess.
Here’s the crux of it all: What’s left of FTX said it wasn’t aware that Backpack bought FTX EU, and it swore off responsibility for the repayment of FTX EU customers and said it can’t verify whether what Backpack is saying is true. Backpack responded by saying that much of the saga leading up to its FTX EU acquisition had already been reported, and it would be renaming FTX EU to Backpack EU before it begins doling out customer claims.
The dueling press releases seem to stem from some bad blood FTX still has with FTX EU. FTX sued its European arm to try and claw back some of the $323 million Sam Bankman-Fried spent for the startup. The suit ended in a settlement whereby FTX EU’s original founders Patrick Gruhn and Robin Matzke bought back FTX EU for $32.7 million. Backpack then bought FTX EU from Gruhn and Matzke, and the ownership shares are apparently awaiting transfer.
Backpack failed to elucidate this whole chain of events in its original press release, but it also doesn’t materially change much. Whether Backpack bought FTX EU from FTX or from the people who bought it from FTX, the basic fact remains that Backpack owns the asset.
Still, the sale itself remains a bit weird, at least to my mind. Backpack told me it bought FTX EU in April 2024 for $32.7 million. That’s just a month or two after FTX EU’s founders bought the company back for that exact price as part of a lawsuit settlement. At the time, FTX reportedly concluded that “no other buyer would agree to purchase” FTX EU.
It doesn’t seem very business savvy for Backpack to pay the full $32.7 million for an exchange that no one else apparently wanted — and which was sold in a court settlement. Couldn’t they have asked for a few million off the sticker price just for getting it off Gruhn and Matzke’s hands? It’s also just a large amount for a startup like Backpack to pay: The project reportedly lost much of its funding in the FTX collapse, and it only raised $17 million in its last funding round. Where did it get $32.7 million to spend on FTX EU? Backpack did not return my request for comment on the financial side of the deal.
In any event, FTX seems to be nitpicking the Backpack press release, the broad strokes of which don’t appear to warrant much doubt. But we’re talking about FTX here, so it just makes sense things wouldn’t go as smoothly as planned.
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- Empire: Crypto news and analysis to start your day.
- Forward Guidance: The intersection of crypto, macro and policy.
- 0xResearch: Alpha directly in your inbox.
- Lightspeed: All things Solana.
- The Drop: Apps, games, memes and more.
- Supply Shock: Bitcoin, bitcoin, bitcoin.
