Backpack Founder Assesses Neo Finance Status Quo: Mutilating Quality Traditional Financial Services, Charging Tedious Fees Yet Failing to Safeguard Investor Interests

Armani Ferrante, CEO of crypto trading platform Backpack, has criticized the concept of 'Neo Finance,' arguing that it fails to improve the traditional financial system and instead undermines existing protections. Ferrante highlighted that these models often resemble stocks but lack dividends, voting rights, or SIPC insurance. They mimic banks but cannot directly receive payments, issue checks, pay salaries, or transfer funds to other accounts.

He added that Neo Finance models feature complex fee structures, lack investor protection, and expose user data. Ferrante believes this approach introduces more intermediaries while removing the most useful features of traditional finance.

Backpack has launched a private beta of its Unified Prediction Portfolio, a cross-margin trading platform for prediction markets. The platform allows users to hedge and trade across markets in a single crypto account. Unlike standalone prediction platforms, Backpack integrates prediction markets with its existing spot trading, perpetual futures, and lending products within a single account.

Why the Move Happened

Backpack's CEO, Armani Ferrante, described prediction markets as notoriously inefficient. He explained that users often have to lock up funds for the duration of an event, limiting flexibility and potential returns. Ferrante said Backpack intends to break down these inefficiencies by using cross-collateralization, allowing the same capital to support positions across multiple product types simultaneously.

The company announced the private beta rollout on Tuesday, offering select active traders the ability to place bets on crypto and financial market outcomes. Ferrante framed this development as part of a broader effort to build a vertically integrated exchange where traders can deploy capital once and then use it flexibly across products.

How Markets Responded

Backpack's prediction markets push comes after a transformative year for the company. In January 2025, the exchange acquired FTX EU, the European arm of the collapsed crypto giant. This gave Backpack access to a MiFID II-regulated framework. In April, the company initiated asset recovery for users whose funds had been frozen since the 2022 FTX collapse.

The prediction markets sector experienced explosive growth over the past year. Kalshi recorded $6.26 billion in trading volume in December 2025, up from $5.81 billion in November, while Polymarket's volume reached $2.28 billion in December, compared to $1.87 billion the prior month. Prediction markets as a whole have become more visible in the mainstream as the major platforms onboarded key partnerships.

What Analysts Are Watching

Backpack's move into prediction markets comes amid regulatory scrutiny. Major platforms, including Polymarket, face heightened attention over issues like insider trading. The beta is initially invite-only, with invitations being extended to the platform's most active traders. The team will gauge market response and refine the risk engine ahead of broader availability.

The announcement did not specify which markets will be available at launch or how the platform will ensure regulatory compliance. With its move into prediction markets, Backpack joins a growing list of crypto platforms entering the sector. Coinbase launched a prediction market site in partnership with major platform Kalshi in November 2025, while MetaMask previously partnered with Polymarket to allow users to trade predictions directly from its self-custodial wallet.

Backpack's prediction market platform is designed to allow users to quote on price predictions, get filled, and immediately hedge on perpetual contracts—all within a single margin account. The beta will gradually expand, adding new features, more markets, and mechanisms unique to a fully integrated system.

The platform aims to let users deploy capital not just in a single prediction, but across all of Backpack "without fragmenting balances" while maintaining other positions. This is part of a broader effort to create a vertically integrated exchange where traders can deploy capital once and use it flexibly across products.