Ripple Cancels Plans to Buy Fortress Trust
Ripple CEO announces decision against acquiring Fortress Trust due to security incident. Ripple remains investor in blockchain payment network.
On September 28th, Brad Garlinghouse, the CEO of Ripple, made a big announcement. Through a post on X, he revealed that Ripple had decided against acquiring Fortress Trust. Instead of a full acquisition, Ripple would maintain its position as an investor in the blockchain-based payment network.
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
“We’ve since made the decision not to move forward with an outright acquisition, though Ripple will remain an investor in Fortress.”
The primary reason behind Ripple's decision can be traced back to a security incident at Fortress Trust. On September 12th, Fortress Trust fell victim to a hack, resulting in a loss of between $12 to $15 million. The stolen assets included Bitcoin (BTC), USDT, and USDC. Such security breaches, especially of this magnitude, can significantly impact the reputation and trustworthiness of a platform, making mergers or acquisitions more complex.
Ripple had initially offered a guarantee to compensate Fortress Trust clients for their losses as part of the proposed acquisition deal. Despite the setback caused by the hack, Garlinghouse had words of praise for the team at Fortress. He acknowledged their skills and expressed a keen interest in collaborating with them in the future.
“While this outcome is different from what was originally planned, we’ll continue to support them and hope to work together in the future.”
Furthermore, Ripple's commitment to Fortress isn't entirely off the cards. Garlinghouse confirmed that Ripple would continue to invest in the company, including its FortressPay services, as long as their original intentions and visions align.
Scott Purcell, a figure with a substantial history in the industry, established Fortress Trust, a company offering financial and regulatory support for blockchain firms. Purcell previously served as CEO of crypto custodian Prime Trust until 2020. Notably, Prime Trust faced receivership years after his departure when BitGo, another custodian, terminated its intended acquisition of the company.