Ripple Abandons Fortress Trust Acquisition Amidst Controversy
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In a surprising turn of events, Ripple, a prominent player in the cryptocurrency sphere, has abruptly scrapped its plans to acquire Fortress Trust, a Nevada-based chartered trust company specializing in digital asset custody and payment services.
The announcement, made just weeks after CryptoSignals reported the initial declaration of the intended acquisition, has sent shockwaves through the crypto industry.
CEO Brad Garlinghouse, taking to X, delivered the news but offered no detailed explanation for this about-face. Garlinghouse did, however, emphasize Ripple’s ongoing commitment to supporting Fortress Trust and expressed hope for future collaborations.
A few weeks ago, we signed a letter of intent to acquire Fortress Trust – we’ve since made the decision not to move forward with an outright acquisition, though Ripple will remain an investor in @Fortress_io.
— Brad Garlinghouse (@bgarlinghouse) September 28, 2023
Did Ripple Back Out Following Fortress Trust Hack Scare?
The cancellation unfolded against the backdrop of a controversial incident involving Fortress Trust. On September 12, Fortune reported a substantial crypto loss—ranging from $12 to $15 million—in a recent hack affecting a fraction of Fortress Trust’s vast customer base.
CEO Scott Purcell clarified that the breach did not occur on their platform but on a third-party service utilized by a subset of clients. Interestingly, Ripple responded swiftly, injecting $15 million to restore the affected accounts.
Last week, 4 Fortress customers were impacted by a third-party vendor whose cloud tools were compromised. Thankfully there is no breach within Fortress Technology or systems, impacted accounts were fully restored, and most importantly, of course, there is no loss of funds.
— Fortress IO (@Fortress_io) September 7, 2023
Purcell hinted at internal divisions within Ripple regarding the acquisition, suggesting some team members harbored reservations about Fortress Trust’s technology and clientele. This revelation adds complexity to Ripple’s strategic decision.
The collapse of the deal poses challenges for both Ripple and Fortress Trust as they grapple with heightened competition and regulatory pressures within the crypto arena. Ripple continues its legal tussle with the US Securities and Exchange Commission (SEC) over the regulatory status of its native token, XRP.
Fortress Trust, on the other hand, stands as one of the few chartered trust companies in the United States equipped to provide crypto custody and payment services. However, the recent hack incident may inflict damage to its reputation and erode customer trust, casting a shadow over its future prospects.
