Less than a month after revealing plans to acquire the chartered trust company Fortress Trust, blockchain firm Ripple has now backed out of its acquisition plan. Ripple CEO Brad Garlinghouse revealed that his company will “remain an investor” in 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.
— Brad Garlinghouse (@bgarlinghouse) September 28, 2023
Ripple Calls Off Acquisition
On September 8th, Ripple announced its intention to acquire Fortress Trust, a subsidiary of the financial company Fortress IO, for an undisclosed amount. The announcement followed the blockchain company’s previous acquisition of crypto custody startup Metaco for $250 million.
Fortress Trust operates as a digital asset custodian with a Nevada Trust license, providing regulatory and technology infrastructure for blockchain firms. Ripple’s initial plan to acquire Fortress Trust would have meant an additional license to its list of U.S.-based regulatory licenses.
A day before Ripple’s acquisition announcement, Fortress IO revealed a security breach that caused four clients to lose funds. The firm added that these affected users have been made whole.
In a September 12th interview with Fortune, Fortress Trust CEO and founder Scott Purcell disclosed that only $12 million to $15 million was lost from the platform during the hack. The report added that Ripple was, in the actual sense, the company that covered the losses as part of the acquisition.
In the latest move, Garlinghouse noted that his company will continue to support Fortress Trust.
“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,” he said.
Impact on Affiliated Firms
Ripple’s latest announcement not to acquire Fortress Trust will likely affect other companies that would have benefited from the cash flow.
An example is the Bitcoin trading platform Swan Bitcoin. The firm announced two weeks ago that it is working with BitGo to launch a Bitcoin-Only Trust Company that will operate in the U.S. With Fortress Trust operating as Swan Bitcoin’s custodian, the Bitcoin-focused firm might now be unavailable to profit from Ripple’s expansion plan in the country.
