Backpack, Rising from the FTX Ruins, Why is it Coming to the Aid of Chinese Creditors?
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Backpack, Rising from the FTX Ruins, Why is it Coming to the Aid of Chinese Creditors?
The Backpack exchange, founded by former FTX executives, plans to support creditors in restricted regions through the bond market, aiming to fill the market gap left by official proceedings while reshaping the trust foundation of the crypto industry.
Navigating Web3 tides with focused insightsBy Luke, Mars Finance
Under the long shadow of FTX's dramatic collapse, millions of global creditors remain anxiously awaiting final judgment. Yet for users in specific jurisdictions such as mainland China, a glimmer of hope appears to be extinguished by a single legal document. Citing concerns over local regulatory risks, the FTX bankruptcy estate has proposed to the court that 49 countries and regions—including China and Russia—be designated as "restricted jurisdictions." This could exclude users from these areas from any compensation distribution, leaving them facing total financial ruin.
Amid this legal and financial "no man's land," an unexpected name has emerged: Backpack exchange. A young platform founded by former FTX executives—and itself once a victim of the FTX collapse—it is rumored to be launching a dedicated bond market to take on and support claims from Chinese and other regional users abandoned by the official liquidation process.
This dramatic turn raises profound questions: Why would a team reborn from the ashes of FTX choose to confront a liability even the FTX estate desperately seeks to avoid? Is this merely an act of moral solidarity, or a carefully calculated strategic move? The truth may be far more complex than it first appears. Backpack’s initiative is not just about redemption; it represents a sophisticated reimagining of the foundational trust upon which the crypto industry must rebuild. Rooted in the founders’ unique sense of “original sin” and mission, backed by proven technical capabilities, and driven by deep insight into the nature of post-FTX trust crises, Backpack aims to transform FTX’s greatest failure into its own most distinctive success story.
Original Sin and Redemption
Backpack’s choice is deeply rooted in the inseparable ties between its founding team and FTX. Its core members all bear strong FTX/Alameda imprints: CEO and founder Armani Ferrante was previously a software engineer at Alameda Research and the creator of Anchor, a key development framework in the Solana ecosystem; co-founder Tristan Yver served as Head of Strategy at FTX US; and legal lead Can Sun was formerly FTX’s General Counsel. They possess an unparalleled firsthand understanding of how that once-glorious crypto empire operated—and why it ultimately failed.
Yet defining them simply as “former FTX staff” misses a crucial part of the narrative. More importantly, they were also direct victims of the disaster. In September 2022, Coral—the predecessor to Backpack—closed a $20 million strategic funding round led by FTX Ventures and Jump Crypto. Just two months later, FTX’s implosion caused the startup to lose over 80% of its operational funds held on the exchange. As Armani Ferrante later described in interviews: “It felt like being knocked out cold in the boxing ring—needing emergency resuscitation just to survive.”
Rather than succumb to defeat, this near-fatal blow forged Backpack’s unique post-FTX mission. From day one, the team committed to building an exchange that fundamentally addresses the issues of trust and transparency that brought down FTX. Ferrante has repeatedly stated publicly: “In the post-FTX era, you need trust and transparency to become a real alternative.” He reflected: “People used to praise FTX for moving fast… but it turned out they moved so quickly because they took every shortcut imaginable.” Consequently, Backpack was designed with verifiability at its core—ensuring every state transition is signed by key pairs, with full ledger snapshots always available for audit, technically eliminating any possibility of opaque manipulation. This mission, born of lived trauma, gives Backpack a narrative authenticity that cannot be easily replicated. When they speak of trust, they do so with tens of millions of dollars lost; when they advocate for other FTX victims, it is not merely business—it completes their own redemption arc.
A Great Wall of Claims
As the Backpack team rebuilt from the rubble, countless FTX users in China found themselves confronting an insurmountable legal barrier. The FTX estate filed a motion with the U.S. Bankruptcy Court in Delaware, proposing to designate 49 jurisdictions as “potentially restricted areas,” citing compliance obligations and warning that asset distributions to these regions “could trigger fines and penalties, including personal liability for directors and officers, and/or criminal penalties including imprisonment.”
The scope and scale of this exclusion are staggering. According to calculations by The Block based on court filings, approximately $800 million in claims originate from these 49 “restricted jurisdictions.” Notably, claimants from mainland China account for a striking 82%, amounting to roughly $656 million. This means a vast and legitimate group of creditors could be stripped of their right to compensation solely due to geography.
Faced with systemic exclusion, Chinese creditors have not remained passive. One creditor, Weiwei Ji, submitted a formal objection on behalf of over 300 Chinese users. In his statement, he expressed outrage: “My family holds four KYC-verified FTX accounts with total claims exceeding $15 million… We fully complied with every procedural requirement under the plan. Now this motion arbitrarily and unfairly jeopardizes our right to receive distributions.”
Their legal arguments strike at the heart of the issue: First, geographic-based exclusion constitutes “unfair discrimination,” directly violating fundamental principles of the U.S. Bankruptcy Code. Second, the FTX estate has provided no legal basis to justify such territorial discrimination. Crucially, creditors argue that payouts—denominated and settled in USD rather than cryptocurrency—can be legally distributed through established financial channels such as Hong Kong, following precedents set in the Celsius bankruptcy case. Furthermore, while Chinese law prohibits crypto trading, it recognizes digital assets as personal property, undermining the estate’s claimed “legal risk.”
The FTX estate’s ultra-conservative risk-avoidance strategy, though seen as “prudent” by traditional legal practitioners, has inadvertently created a massive market vacuum. By reducing a complex global problem into a domestically focused solution centered on U.S. liability, the estate has pushed hundreds of millions in valid claims to the brink. It is precisely this institutional failure that opens a golden opportunity for agile, crypto-native players like Backpack.
The European Rehearsal
Prior to reaching into broader and more complex markets, Backpack had already completed a critical “live rehearsal” within a highly regulated environment. In early 2025, Backpack announced the successful acquisition of FTX EU, approved by the Cyprus Securities and Exchange Commission (CySEC). Although the deal initially sparked public controversy—with the FTX estate claiming unawareness—Backpack swiftly clarified that it had legally acquired the assets from former insiders who had received prior approval from the bankruptcy court. This sequence demonstrated the team’s adeptness in navigating intricate cross-border M&A and regulatory negotiations.
More significantly, Backpack established a clear and functional claims process for FTX EU users. Users simply register on the Backpack EU platform using their original FTX email, complete KYC verification, link their old accounts, and await fund disbursement—all settled in euros, now fully withdrawable. As Armani Ferrante put it: “Customer reimbursement is a crucial step toward restoring trust and confidence in the industry. Backpack is committed to returning funds to FTX EU users as quickly and securely as possible.”
The FTX EU claims process was far more than a standalone commercial project—it served as a public beta test for addressing wider FTX liabilities. By successfully executing this operation, Backpack gained invaluable experience in handling cross-border bankruptcy claims, built robust compliance frameworks and technical infrastructure, and sent a powerful message to the entire market—especially forgotten Chinese creditors—that Backpack’s promises are grounded in proven, executable capability. This European track record became the most credible credential for expanding into larger, uncharted territories.
Strategic Masterstroke: Why This Is Far More Than Charity
Connecting the dots reveals a clear strategic picture. Backpack’s support for Chinese creditors is the perfect convergence of founding mission, blue-ocean strategy, and growth ambition.
First, it represents the ultimate fulfillment of its post-FTX redemption mission. By aiding the most vulnerable victims left behind by official processes, Backpack directly fulfills its founding pledge to build a truly trustworthy exchange.
Second, it exemplifies textbook blue-ocean strategy. While giants like Coinbase and Binance battle fiercely in the “red oceans” of fee wars and listing speed, Backpack charts a new course—shifting competition onto the dimensions of trust and resolution of historical grievances. A market comprising hundreds of millions in claims and hundreds of thousands of anxious users stands completely uncontested. By stepping in, Backpack secures not only moral high ground but also builds a unique brand moat.
Finally—and most critically—lies the immense user growth potential. Unlike traditional customer acquisition via airdrops or rebates, Backpack addresses a pain point worth over $650 million, potentially converting hundreds of thousands of KYC-verified, high-net-worth crypto users into loyal customers at virtually zero cost. These users, having been rescued by Backpack after despair, will develop loyalty levels unreachable through conventional marketing. This is an innovative approach that elevates “customer support” and “crisis management” to the highest level of growth strategy—a new model where action builds trust, and trust acquires users.
Towards a New Paradigm of Trust in the Post-FTX Era
As the long saga of FTX’s liquidation draws toward its end, perhaps the most compelling chapter isn’t being written in Delaware courtrooms—but quietly unfolding on Backpack’s servers. Backpack’s plan to support FTX creditors in China and other restricted regions reveals the sophistication of its business logic: born from personal trauma, seizing a vast gap left by official proceedings, and aiming at a grand strategic vision—to rebuild trust from ruins.
This is no simple charitable gesture, but a bold strategy turning the industry’s biggest disaster into its strongest competitive advantage. It signals a potential shift in the paradigm of crypto competition: future exchanges may no longer compete solely on technology or features, but on their ability to resolve past failures, shoulder industry-wide responsibilities, and thereby forge deeper, more resilient relationships of trust. Backpack is betting that in the post-FTX era, the rarest and most valuable asset won’t be code or liquidity—but trust that is verifiable, tangible, and worthy of reliance. This goes beyond recovering funds; it’s about restoring faith in the entire industry.
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