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November 12, 2023 by Kashif Saleem
A new cryptocurrency exchange is being launched by a group of former FTX executives, including one who testified against FTX founder Sam Bankman-Fried in his fraud trial. The new exchange, called Backpack Exchange, claims to offer a more secure and transparent way of trading digital assets.
Former FTX general counsel Can Sun is launching a new cryptocurrency exchange, Backpack, which received permission from Dubai’s cryptocurrency regulator last month and plans to raise funds at a $100 million valuation. https://t.co/UPS1YWNnIh
— Wu Blockchain (@WuBlockchain) November 12, 2023
Backpack Exchange is a project of Trek Labs, a Dubai-based startup led by Can Sun, the former general counsel of FTX. Sun was one of the key witnesses in the Bankman-Fried trial, who was convicted earlier this month for diverting $9 billion of customer funds to his trading firm, Alameda Research through a secret software backdoor.
Sun said he left FTX after finding out about Bankman-Fried’s scheme and refused to help him cover them up. He went further to later cooperate with federal prosecutors by providing crucial evidence against Bankman-Fried.
Sun expressed his desire to apply the insights gained from FTX’s failure to develop a superior option for crypto traders. Collaborating with Armani Ferrante, an ex-FTX colleague and the CEO of Trek’s British Virgin Islands-registered holding company, they aim to create a better solution.
Ferrante also manages a partner firm, Backpack, specializing in the design and operation of digital currency wallets. Additionally, Trek’s executive team includes Sun’s former legal deputy, who happens to be Ferrante’s wife.
Backpack Exchange Enters Post-FTX Market
Backpack Exchange, which plans to launch in beta later this month, will use Backpack’s technology to allow users to hold funds in their own “self-custody” crypto wallets that the exchange itself wouldn’t be able to unilaterally access.
These wallets use so-called multiparty computation techniques that require several parties to approve any transaction. Customers on Backpack Exchange would be able to verify their holdings at any time, Sun and Ferrante said.
The venture is looking to sell a 10% stake to investors at a valuation of over $100 million. Sun and Ferrante said they had hired other former FTX legal and compliance employees at Trek because of their skills and experience. Sun disclosed his previous role at FTX in regulatory filings and investor materials, and he also informed Dubai’s regulator of his testimony.
In a post-FTX world, you need trust and transparency to create a true alternative to the other players, Sun said.
It remains to be seen how investors and users will react to the new exchange, given the background of its founders. Ferrante’s name, not Sun’s, appeared in a press release last month announcing the launch of Backpack Exchange.
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