Ripple Pulls Out of Fortress Trust Acquisition

Cryptocurrency company Ripple is not moving ahead with its previously announced plans to acquire custodian Fortress Trust.

“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,” Ripple CEO Brad Garlinghouse said in a Thursday (Sept. 28) post on X.

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

“The Fortress team is incredibly talented, and has built products solving real customer problems. While this outcome is different from what was originally planned, we’ll continue to support them and hope to work together in the future!” Garlinghouse added in a follow-up post.

The Fortress team is incredibly talented, and has built products solving real customer problems. While this outcome is different from what was originally planned, we’ll continue to support them and hope to work together in the future!

— Brad Garlinghouse (@bgarlinghouse) September 28, 2023

Bloomberg reported Thursday that the announcement comes after a security breach that affected only a small fraction of Fortress Trust’s customers but resulted in the loss of approximately $15 million in cryptocurrency. Scott Purcell, founder and CEO of Fortress Trust, clarified that while a third-party service experienced the breach, his company itself was not hacked, according to the report.

To ensure that the affected accounts were made whole, Ripple swiftly wired in $15 million, preventing any customer impact or losses, the report said. Purcell also mentioned that the $15 million sent by Ripple may be repaid once they collect from the responsible third-party service.

Ripple announced its earlier intention to acquire Fortress Trust on Sept. 8, saying the move would strengthen Ripple’s position in the growing enterprise crypto market and further its business and product roadmap. The company added that the closure of the deal was subject to due diligence and regulatory approvals. 

At the time, Ripple said that one of the significant benefits of the acquisition would be the expansion of Ripple’s regulatory licenses. Fortress Trust holds a Nevada Trust license, which would add to Ripple’s growing portfolio of licenses. Ripple and its subsidiaries already hold a New York BitLicense, more than 30 Money Transmitter Licenses across the United States, and an in-principle Major Payment Institution License from the Monetary Authority of Singapore.

Four months earlier, Ripple acquired Swiss digital asset custody provider Metaco for $250 million, saying that deal will help Ripple tap into the institutional crypto custody market.