Web3 digital wallet company Backpack has announced it is launching a cryptocurrency exchange after securing a key license from the Dubai Virtual Assets Regulatory Authority, or VARA.
Backpack, which was started by the crypto infrastructure company Coral, said in a statement that its new exchange will be regulated after being issued a Virtual Asset Service Provider, or VASP, by VARA. "Backpack Exchange has developed a next-generation exchange that incorporates a novel zero-knowledge proof of reserves, or zk-proofs, Multi-Party Computation, or MPC, for custody, and low latency order execution," the company said.
VARA is responsible for regulating "all virtual asset activities across the Emirate of Dubai," according to the statement.
Armani Ferrante, who is both CEO and founder of Backpack, had to navigate some challenging circumstances during the last year. The former Alamada Research engineer raised $20 million for Coral in a round co-led by FTX Ventures just weeks before the exchange's collapse. In the wake of FTX's demise, Ferrante was forced to scramble after Coral lost $14.5 million that was stuck on the exchange, including the $10 million that FTX Ventures had invested in the startup.
Ferrante's move to start an exchange of his own appears to be inspired, at least in part, by the calamity caused by FTX's downfall.
"It's time to put an end to the days of opaque crypto exchanges representing everything our industry stands against," he said in a statement. "It shouldn't be normal to use an exchange with a single point of failure, without proof of reserves, or without auditability."
New exchange starts with beta
The new exchange is slated to begin in beta in November before going live for the general public in the first quarter of 2024, Backpack said in its statement.
"The Backpack Exchange team will be working to add in various trading functionalities such as derivatives, margin [and] cross-collateral," the company also said, adding that its compliance team has professional experience with Barclays, State Street, HSBC and Coinbase.
Updated to reflect the size of FTX Ventures' investment in Coral.
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