Backpack launches non-profit FTX debt marketplace, enabling creditors to sell bankruptcy claims to third-party buyers amid $6.2B recovery progress.
Backpack Exchange has established a non-profit claims sale channel that allows FTX creditors to sell their bankruptcy claims to third-party purchasers. This alternative to the official distribution process is now available and has already generated $6.2 billion in two significant payment rounds.
The platform provides a comprehensive, all-inclusive process that includes identity verification, claims validation, offer confirmation, and settlement payment without fees.
Backpack has declared that it will not derive any revenue from the service, and the marketplace will serve solely as a resource for the crypto community in the wake of its $14.5 million loss on FTX.
Restricted jurisdiction claims generate market uncertainty
Chinese users account for 82% of the total value of the disputed $800 million, while FTX creditors contend with ambiguity regarding claims in 49 restricted jurisdictions. The launch coincides with this.
To determine the feasibility of distribution, the FTX Recovery Trust seeks court approval to treat these claims as disputed until they obtain legal opinions.
Backpack cautioned that the sale of claims entails opportunity costs, and it also noted that creditors who continue to hold may receive increased compensation in future distributions.
Following the acquisition of FTX EU, the exchange intends to supervise the distribution of funds to European consumers under the Backpack EU brand, which is set to debut in Q1 2025.
The design of the marketplace caters to the growing need for liquidity in the secondary market. FTX creditors are opting for immediate liquidity rather than waiting for future distributions that may extend beyond 2025.
The current distribution rates range from 54% to 120%, depending on the claim category. Convenience claims under $50,000 are fully reimbursed plus 9% annual interest.
FTX Recovery Progress Faces Geographic Distribution Challenges
Since the commencement of repayments in February 2025, FTX has allocated $6.2 billion across two significant payment cycles.
In May, the second distribution was made to larger claimants, with a total of $5 billion, while the first distribution was $1.2 billion for convenience class creditors with claims under $50,000.
Dotcom Customer Entitlement Claims received 72% distributions, while US Customer Entitlement Claims received 54% reimbursements.
General unsecured and digital asset loan claims received 61% distributions, while convenience claims received a full 120% reimbursement, including interest.
The Recovery Trust is currently endeavoring to contest claims from 49 restricted jurisdictions, such as China, Russia, Iran, North Korea, and 45 other nations, where crypto trading is prohibited by local laws or where FTX lacked the necessary licensing.
A 45-day notice period is provided to affected creditors to object to the restricted status of their jurisdiction.
Chinese creditors are launching legal challenges, contending that mainland China acknowledges the commodity characteristics of cryptocurrency and allows residents to possess digital assets.
According to one creditor, USD settlements should be legally permissible for overseas holdings, even though China does not endorse crypto trading.
Weiwei Ji, representing more than 300 Chinese creditors, submitted objections that asserted $15 million in four KYC-verified accounts.
Ji argued that neither fact nor law supports China’s incorporation as a restricted jurisdiction, citing the precedent of Hong Kong-based distribution mechanisms.
Backpack’s Strategic Role in the FTX Recovery Ecosystem
Backpack’s acquisition of FTX EU, which has been approved by the Cyprus Securities and Exchange Commission and the FTX bankruptcy court, establishes the exchange as a critical participant in the recovery process.
As part of the court-approved bankruptcy claims procedure, the company will oversee the distribution of funds to FTX EU customers.
Ownership disputes beset the acquisition, as the FTX estate contended that the share transfers to the founders, Patrick Gruhn and Robin Matzke, had not been finalized.
Backpack asserts that they finalized the transaction in June 2024, following regulatory approval from CySEC and rigorous due diligence.
The company emphasized the value of customer restitution in reestablishing industry trust, stating that the primary objective is to return funds promptly and securely.
Sam Bankman-Fried is incarcerated until December 2044 due to his 25-year sentence for fraud.
He was recently transferred to the low-security Federal Correctional Institution Terminal Island in Los Angeles, while accomplices Caroline Ellison and Ryan Salame were sentenced to prison.
The Justice Department is currently negotiating with various political action committees that will extend until 2025 to recover $13.25 million in political contributions associated with former FTX executives.
