Ex-FTX execs, including general counsel Can Sun, plan to launch crypto exchange Backpack and say they want to protect user funds with lessons from FTX's failure
Ex-FTX lawyer Can Sun and other former company executives want the new exchange to allow customers to verify holdings at any time
Context & Ripple Effects
Backpack’s pitch is inseparable from FTX’s collapse and the ensuing allegations that former leaders misappropriated customer-related funds for personal projects, documented in FTX’s lawsuit against its former leadership. The proposed ability for customers to check holdings directly addresses the trust deficit created by that failure.
The effort became more consequential as Backpack later acquired FTX EU and assumed responsibility for distributing FTX bankruptcy claims, tying a new exchange’s credibility to a legacy customer-recovery process.
First-order effects
- Can Sun and the other former FTX executives must make customer-verifiable holdings a core operating feature of Backpack, rather than a generic assurance about safeguarding funds.
- Backpack’s founders face an immediate credibility test: their FTX affiliation makes the exchange’s custody and transparency practices central to attracting users.
Second-order effects
- Competing exchanges may face greater pressure to offer clearer, more readily auditable evidence of customer holdings if Backpack’s approach resonates with users.
- The FTX association raises the cost of opaque controls for new crypto venues, making governance and custody design more important in customer acquisition than branding alone.
Third-order effects
- If customer-verifiable holdings become a baseline expectation, exchange competition could shift toward trust infrastructure that is continuously demonstrable rather than asserted after a failure.
- Transparency mechanisms alone may not resolve the control failures associated with FTX; the longer-term differentiator is likely to be whether verification is paired with durable governance and separation of customer funds.
The trend: Crypto exchanges are increasingly treating verifiable custody and operational transparency as product features in the effort to close the sector’s legitimacy gap after major platform failures.