VCs are backing a cryptocurrency startup led by a former FTX and Alameda Research employee as part of a new cryptocurrency exchange.
In a Series A funding round, FTX and Alameda alumni raised $17 million for a cryptocurrency exchange called Backpack. Backpack valued the company at $120 million and attracted capital investment from companies such as Wintermute and Amber Group.
Backpack was launched in October last year, about a year after FTX collapsed, and was co-founded by Armani Ferrante and Cansun. Ferrante serves as CEO of Backpack and was an early Alameda employee.
Sun, who testified as a government witness in the Sam Bankman-Fried fraud case, served as FTX’s general counsel and said he was unaware of the company’s illegal use of its customers’ cryptocurrencies and funds. Backpack has 40 employees, five of whom are former FTX employees.
Ferrante said expectations and scrutiny around building cryptocurrency exchanges are definitely higher following the FTX incident. Initially, companies avoided investing in Backpack, but things improved after it was found guilty in a New York court last year, Ferrante said.
Backpack is a Dubai-based exchange that already has 420,000 users globally. The company recorded $6.5 billion in one-way trading volume this month and is reportedly in demand in Asian markets to grab some of the market share left behind by FTX.
Other companies are also rushing to fill the gap, especially professional traders, who are one of FTX’s main customer bases. For example, Fidelity-powered EDX Markets launched in 2023 and expanded into Singapore.
While Ferrante and Sun are ending their relationship with Alameda, Bankman-Fried will be affected by the court’s conviction. The former mogul pleaded with the judge to shorten his sentence to up to six years and six months on the grounds of autism and said he was “deeply sorry” for the $8 billion fraud.
Federal prosecutors are scheduled to announce a recommended sentence on March 15 and impose sentencing on March 28.