A group of former FTX executives has collaborated to establish a new crypto trading platform based in Dubai. The startup, named Trek Labs, is led by Can Sun, the former general counsel of FTX. Trek Labs received a license from Dubai’s crypto regulator last month, as reported by The Wall Street Journal.
Armani Ferrante, another former FTX executive, serves as the chief executive of Trek’s holding company in the British Virgin Islands. Ferrante is also involved in a partner firm called Backpack, specializing in the design and operation of digital currency wallets. Ferrante’s name was prominently featured in the press release announcing the launch of Backpack Exchange.
Can Sun and Armani Ferrante, in discussions with the WSJ, expressed their commitment to addressing the issues that contributed to the downfall of FTX. They place significant emphasis on ensuring the protection of user funds, drawing from the lessons learned from their previous experiences.
Backpack Exchange, the trading name for Trek Labs, plans to leverage Backpack’s technology to enable users to hold their funds in self-custody crypto wallets. These wallets employ multiparty computation techniques, necessitating approval from multiple parties for any transaction. This approach enhances security and aligns with the goal of prioritizing user fund protection.
By implementing the self-custody approach with multiparty computation, Backpack Exchange ensures that the exchange itself won’t have unilateral access to users’ funds, thereby enhancing security and transparency. Customers on the platform will have the capability to verify their holdings independently at any given time.
Despite these security measures, the reception of Trek Labs by investors and users remains uncertain, considering the association with FTX. Can Sun recognizes that building trust and ensuring transparency are pivotal in establishing a genuine alternative to existing players, especially in the post-FTX era. The success of Trek Labs will likely depend on its ability to address and overcome concerns related to the previous issues faced by FTX.
Trek Labs Hire More Former FTX Employees
To strengthen their team, Can Sun and Armani Ferrante have brought in other former legal and compliance employees from FTX to join Trek Labs.
Sun has maintained transparency about his prior role at FTX, disclosing it in regulatory filings and investor materials. He has also informed regulatory authorities in Dubai about his testimony against Sam Bankman-Fried, the founder of FTX, who was recently convicted for commingling customer and company funds.
During the trial, Sun testified that Bankman-Fried had assured him that customer funds were segregated and protected. However, it was later revealed that funds had been diverted to Bankman-Fried’s trading firm via a secret software backdoor. Sun’s refusal to provide legal justifications for the use of customer funds led to his departure from FTX.
Can Sun later cooperated with the investigation and signed a nonprosecution agreement with federal prosecutors.
Armani Ferrante also witnessed the FTX disaster firsthand. He worked at Alameda, Sam Bankman-Fried’s trading firm, and then at FTX. Ferrante experienced the collapse of the exchange and the subsequent loss of funds. In Trek Labs, he holds a minority share in the holding company, alongside other former FTX employees.
Meanwhile, FTX’s new management has been attempting to recover funds distributed before its Chapter 11 filing in November of the previous year.
FTX has taken legal action against Kives and his venture capital firm, K5, aiming to recover the approximately $700 million invested by Sam Bankman-Fried. The complaint alleges that Bankman-Fried, described as a “profligate patron,” sent millions to Kives, K5 Global, and Baum after attending a social event hosted by Kives in 2022.
Additionally, FTX’s bankruptcy advisers have filed a lawsuit against Bybit Fintech, seeking to recover $953 million worth of cash and digital assets that were withdrawn from the exchange before its Chapter 11 filing a year ago.