Ripple, the blockchain startup, has recently announced that it will no longer proceed with the acquisition of crypto custodian Fortress Trust. However, despite this decision, Ripple plans to retain its investment in the company.
The decision to back out of the deal came after Fortress Trust experienced a cryptocurrency hack that impacted a small number of its customers. Ripple CEO Brad Garlinghouse explained in a post on X that the decision not to move forward with the acquisition was made after careful consideration. He stated, “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.”
Ripple’s initial intention was to acquire Fortress Trust, a Nevada-based chartered trust company that provides wallets and payment services. However, just days after the announcement, news broke that Fortress Trust had suffered a significant cryptocurrency hack resulting in a loss of $12 to $15 million. Despite the breach, Ripple stepped in to compensate the affected customers by sending $15 million to cover their losses. Fortress Trust CEO Scott Purcell clarified that only four out of their 225,000 customers were affected by the hack, and Ripple’s intervention ensured that no customer experienced financial losses. Purcell also mentioned that Fortress Trust would likely repay Ripple once they collect from the third party responsible for the hack.
Purcell further highlighted that there were differing perspectives within the Ripple team regarding the acquisition of Fortress Trust. Some team members expressed excitement about the technology and customer base, while others had reservations. This rift in opinions could have potentially influenced Ripple’s decision to back out of the deal.
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Interestingly, this is not the only acquisition deal in the crypto custodian space that has fallen through recently. BitGo, another prominent player in the industry, also withdrew from an agreement to acquire Prime Trust, where Scott Purcell had previously served as CEO. Prime Trust faced its own challenges earlier in the summer when it entered receivership amid accusations of losing access to digital wallets containing assets worth tens of millions of dollars. The company was also accused of utilizing customer funds to fulfill withdrawal requests.
Despite the setback with the failed acquisition, Ripple remains focused on its future plans. The excitement surrounding Ripple’s valuation and IPO rumors continues to grow, especially during Ripple’s Proper Party. Financial expert Linda P. Jones has indicated that Ripple’s stock value could surge following an IPO, drawing parallels to Coinbase’s successful journey. Jones also emphasized the legal clarity surrounding Ripple and the substantial XRP reserves in escrow, which could further drive the company’s post-IPO valuation. Some market analysts even believe that Ripple’s valuation could skyrocket, potentially leading to a significant increase in the price of XRP.
While Ripple has decided not to proceed with the acquisition of Fortress Trust, the company’s investment in the parent company, Fortress Financial Technologies, will continue. This decision aligns with Ripple’s goal to further strengthen its position in the crypto industry. By retaining its investment and focusing on its future plans, Ripple aims to solidify its place as a leading blockchain startup and continue driving innovation in the space.
