Ripple has decided to reverse its planned acquisition of
Fortress Trust, a subsidiary of Fortress Blockchain Technologies that offers
wallet and payment services. Less than a month after announcing its intention
to acquire the firm, Ripple has chosen to back out of the deal.
Brad Garlinghouse, the CEO of Ripple, said on X (formerly
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, though Ripple will remain an investor in Fotress
Trust.”
This strategic acquisition was an essential step
towards enhancing Ripple’s regulatory licenses and bolstering its
infrastructure capabilities, particularly in the blockchain and cryptocurrency
payments solutions sector. As Ripple continues to grapple with its ongoing
legal dispute with the SEC, the acquisition aimed to position the company as a
trusted brand for enterprises, Finance Magnates reported.
One key development that may have contributed to Ripple ‘s
decision was a recent security incident involving Fortress Trust. A few days
after Ripple’s initial announcement, Fortune Magazine reported that Fortress
Trust had suffered losses ranging from USD $12 million to USD $15 million due to a
cryptocurrency hack. Scott Purcell, the Founder and CEO of Fortress Trust,
revealed that only a small fraction of their customer base, specifically “four customers out of 225,000 customers,” were affected.
In response to these reports, Purcell clarified to Bloomberg
that the security breach had targeted a third-party service rather than
Fortress Trust. He emphasized that Fortress Trust had not been directly hacked
and stated: “6 out of Fortress’ 250,000+ customers used it to log into
their accounts.”
Ripple Maintains Investment in Fortress
However, Ripple’s change of plans did not disrupt the
relationship between Ripple and Fortress. Garlinghouse emphasized the company’s
long-standing relationship with Fortress Blockchain Technologies. He praised
Fortress Trust for building a robust business with recurring revenue and a
substantial customer base, including crypto-natives and newcomers to the crypto industry.
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
Fortress Trust holds a Trust license in Nevada, which was
anticipated to add to Ripple’s existing licenses, which include a BitLicense in
New York and more than 30 Money Transmitter licenses across the United States.
These licenses were expected to position Ripple as a trusted and reliable
partner for enterprises, especially given the ongoing legal challenges with the SEC.
Last month, Judge Analisa Torres granted the SEC’s request
to proceed with an appeal, challenging a previous court ruling that determined
Ripple’s sale of XRP cryptocurrency on a digital asset exchange did not breach
securities regulations. This development sets the stage for the SEC to present
its case for an interlocutory appeal, further prolonging the legal dispute.
Ripple has decided to reverse its planned acquisition of
Fortress Trust, a subsidiary of Fortress Blockchain Technologies that offers
wallet and payment services. Less than a month after announcing its intention
to acquire the firm, Ripple has chosen to back out of the deal.
Brad Garlinghouse, the CEO of Ripple, said on X (formerly
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, though Ripple will remain an investor in Fotress
Trust.”
This strategic acquisition was an essential step
towards enhancing Ripple’s regulatory licenses and bolstering its
infrastructure capabilities, particularly in the blockchain and cryptocurrency
payments solutions sector. As Ripple continues to grapple with its ongoing
legal dispute with the SEC, the acquisition aimed to position the company as a
trusted brand for enterprises, Finance Magnates reported.
One key development that may have contributed to Ripple ‘s
decision was a recent security incident involving Fortress Trust. A few days
after Ripple’s initial announcement, Fortune Magazine reported that Fortress
Trust had suffered losses ranging from USD $12 million to USD $15 million due to a
cryptocurrency hack. Scott Purcell, the Founder and CEO of Fortress Trust,
revealed that only a small fraction of their customer base, specifically “four customers out of 225,000 customers,” were affected.
In response to these reports, Purcell clarified to Bloomberg
that the security breach had targeted a third-party service rather than
Fortress Trust. He emphasized that Fortress Trust had not been directly hacked
and stated: “6 out of Fortress’ 250,000+ customers used it to log into
their accounts.”
Ripple Maintains Investment in Fortress
However, Ripple’s change of plans did not disrupt the
relationship between Ripple and Fortress. Garlinghouse emphasized the company’s
long-standing relationship with Fortress Blockchain Technologies. He praised
Fortress Trust for building a robust business with recurring revenue and a
substantial customer base, including crypto-natives and newcomers to the crypto industry.
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
Fortress Trust holds a Trust license in Nevada, which was
anticipated to add to Ripple’s existing licenses, which include a BitLicense in
New York and more than 30 Money Transmitter licenses across the United States.
These licenses were expected to position Ripple as a trusted and reliable
partner for enterprises, especially given the ongoing legal challenges with the SEC.
Last month, Judge Analisa Torres granted the SEC’s request
to proceed with an appeal, challenging a previous court ruling that determined
Ripple’s sale of XRP cryptocurrency on a digital asset exchange did not breach
securities regulations. This development sets the stage for the SEC to present
its case for an interlocutory appeal, further prolonging the legal dispute.
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- Source: https://www.financemagnates.com//cryptocurrency/ripple-abandons-fortress-trust-acquisition-chooses-to-retain-investment-stake/
