Several former FTX executives have teamed up to help build a new cryptocurrency exchange in Dubai with a specific focus on what FTX failed to do — secure customer funds.
Ex-FTX lawyer Can Sun is leading the way with Trek Labs, a Dubai-based startup that received a license to offer cryptocurrency services in the region in late October. Backpack Exchange is the name under which Trek Labs will offer those services.
Sun will receive support from ex-FTX employee, Armani Ferrante, who serves as CEO of Trek’s holding company in the British Virgin Islands, according to a Nov. 11 report by the Wall Street Journal. Ferrante also runs Backpack, a cryptocurrency wallet which is integrated in Backpack Exchange.
Sun’s former legal deputy at FTX, Claire Zhang, who is also Ferrante’s wife, is also on Trek’s executive team. However, once Trek raises an investment round, Zhang plans to transition out of the company as she has been working without pay to “help bootstrap the exchange,” WSJ said.
Sun and Ferrante iterated they wanted to use the lessons learned from FTX’s failure to protect customer funds. Backpack’s technology offers a self-custody solution which integrates a multiparty computation (MPC) technique to ensure funds remain secure. MPC typically involves several parties approving a transaction before funds are moved.
With things heating up, please be aware of phishing attacks on the rise.
Backpack will NEVER ask you for your private keys.
The only valid website URLs are in our bio. Assume anything else is a scam.
— Backpack (@xNFT_Backpack) November 11, 2023
It will also enable Backpack customers to verify funds whenever they want, Sun told WSJ:
“In a post-FTX world, you need trust and transparency to create a true alternative to the other players.”
Backpack Exchange is currently in beta and a wider launch will come later this month, the firm said.
Sun was a witness at Bankman-Fried’s recent fraud trial where he revealed that the former FTX CEO turned to him seeking a legal justification as to why FTX’s funds were at Alameda Research. Bankman-Fried was convicted on all seven fraud-related charges.
Related: How long could Sam Bankman-Fried go to jail for? Crypto lawyers weigh in
Sun said he quit as FTX’s general counsel the day after Bankman-Fried told him about the use of customer money.
“This went against everything that I stood for and was represented to me by Sam.”
Bankman-Fried’s former empire commingled billions of dollars of customer funds through Alameda Research for investment purposes. About $9 billion in customer funds went missing.
Magazine: Deposit risk: What do crypto exchanges really do with your money?