According to documents examined by Fortune, Coinbase expressed early interest in acquiring FTX Europe as of September 2023. In the most recent report by Fortune Magazine, Coinbase (NASDAQ: COIN), a cryptocurrency exchange, actively pursued the acquisition of FTX’s European branch to broaden its presence in the derivatives sector following FTX’s bankruptcy in November 2022.
Although formal discussions did not materialize, Coinbase’s keen interest in FTX Europe underscores the exchange’s determination to expand its global business plan by delving into the derivatives market.
Fortune reports that, based on financial records from FTX Europe, the platform continued to onboard tens of thousands of users even in the midst of its parent company’s bankruptcy. The enduring value of its license, transferrable only through acquisition, drew attention from multiple potential buyers. Consequently, the FTX debtors’ estate decided to auction various components of what was once Sam Bankman-Fried’s formidable empire.
Messages scrutinized by Fortune reveal that Coinbase expressed interest in acquiring FTX Europe, both shortly after FTX’s bankruptcy in November 2022 and as recently as early September 2023 when a European executive from Coinbase inquired about the feasibility of such a deal. However, it’s worth noting that Coinbase has since abandoned its pursuit of this potential transaction, as confirmed by a source familiar with the discussions.
Uncertain regulatory restrictions in the US have cast a shadow over the crypto derivatives trading market. Consequently, Coinbase has been actively working on launching an offshore derivatives exchange with a focus on the Asian market. Additionally, Coinbase is advocating for greater regulatory clarity in the US crypto market.
Coinbase has previously made strategic acquisitions in the derivatives sector, including the futures exchange FairX. A spokesperson from Coinbase stated, “We’re continually evaluating opportunities to strategically expand our business and engaging with numerous teams worldwide.”
Fortune had previously reported that potential suitors for FTX Europe included Crypto.com, along with FTX FDM, the Bahamian entity of FTX currently under the supervision of liquidators appointed by the country’s Supreme Court.
FTX Europe was established through the acquisition of Digital Assets DA AG in 2020. Despite FTX Europe’s sustained profitability, it found itself entangled in the bankruptcy estate’s proceedings.
In July, the FTX debtors, led by former Enron executive John Ray III, initiated legal action to recover hundreds of millions of dollars from FTX Europe’s leadership. The estate alleged that the initial acquisition had been a highly detrimental business move, costing $376 million to acquire a $2 million operating license.
While FTX Europe has attracted interest from prominent cryptocurrency firms in recent months, the debtors’ estate contended that an acquisition is currently not a realistic possibility. In a statement provided to Fortune in July, a spokesperson stated, “The FTX debtors’ professional advisors have concluded that there is no realistic possibility of a sale.”
However, the recent expressions of interest by Coinbase and Trek Labs have added complexity to the bankruptcy estate’s stance as it continues to evaluate offers. According to an individual with knowledge of the situation, the deadline for a proposed sale has been extended from September 17 to September 24, potentially leaving room for an acquisition.
In a statement shared with Fortune on Thursday, a spokesperson for the FTX Debtors reaffirmed their commitment to maximizing the value of FTX’s assets for the benefit of customer recoveries.
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