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Ripple cancels Fortress Trust acquisition, retains investment

Published Sep 29, 2023 06:56AM ET Updated Sep 29, 2023 06:56AM ET
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Crypto company Ripple has decided to cancel its acquisition of Fortress Trust, a Nevada-based chartered trust company, less than a month after announcing the intended deal. Despite this, Ripple will maintain its investment in Fortress Financial Technologies, the parent company of Fortress Trust.

The announcement was made on Friday by Ripple Chief Executive Officer Brad Garlinghouse on X, the platform formerly known as Twitter. "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," Garlinghouse wrote. He added that Ripple still supports Fortress Trust and hopes to work together in the future.

This decision comes after a recent security breach at Fortress Trust. The crypto hack resulted in a loss of $12 million to $15 million, affecting only four out of 225,000 customers. The incident occurred due to a third-party service experiencing a security breach, which six of Fortress's 250,000+ customers used to access their accounts.

Scott Purcell, CEO of Fortress Trust, explained that the hackers stole $15 million from these accounts. In response to this incident, Ripple sent $15 million to compensate the affected users, ensuring no customer losses. Purcell noted that they would likely repay Ripple once they collect from the third-party responsible for the hack.

The cancellation of this acquisition follows a similar withdrawal by BitGo from an agreement to acquire Prime Trust, where Scott Purcell had previously served as CEO. Prime Trust had entered receivership earlier in the summer amid accusations of losing access to digital wallets holding assets worth tens of millions of dollars and utilizing customer funds to fulfill withdrawal requests.

Meanwhile, speculation continues about Ripple's potential initial public offering (IPO). Financial expert Linda P. Jones has suggested that Ripple's post-IPO valuation could mirror or even exceed the trajectory seen by Coinbase (NASDAQ:COIN) due to significant legal clarity surrounding Ripple and substantial XRP reserves in escrow. Some market analysts believe that if Ripple's IPO goes through, the company's valuation could skyrocket significantly, with the potential of XRP price shooting to $39.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Ripple cancels Fortress Trust acquisition, retains investment

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