Within 20 days of announcing the acquisition of Fortress Trust to allegedly expand its pool of licenses in the United States, financial technology firm Ripple is pulling out of the deal.
Ripple’s CEO Brad Garlinghouse made the announcement on X (formerly Twitter) on Sept. 28, saying that “we’ve since made the decision not to move forward with an outright acquisition,” although Ripple will remain a shareholder in Fortress Trust’s parent company Fortress Blockchain Technologies.
Ripple first announced the acquisition on Sept. 8, surprising even company insiders with the news, Cointelegraph has learned. At the time, Ripple revealed plans to acquire other companies in the Fortress’ group, including an affiliated firm, FortressPay.
A few days later, Fortress Trust acknowledged that the acquisition was rushed by a security incident involving a third-party analytics vendor. In an interview with Fortune, Fortress CEO Scott Purcell said the company lost $12 million to $15 million in the attack. A majority of the funds were Bitcoin (BTC), along with small amounts of USD Coin (USDC) and Tether (USDT). Ripple, an investor in Fortress since its seed round in 2022, had to step in to make customers whole.
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
In comments to Cointelegraph, Purcell said the merging cancelation “is not a big deal”. According to him, the plan change is unrelated to the security incident. “They are an investor in Fortress and a great partner, nothing changes there,” he noted.
Cointelegraph reached out to Ripple, but the company declined to comment beyond its CEO’s X post.
As Ripple continues its high-profile legal battle with the United States Securities and Exchange Commission, the deal failure could benefit other companies linked to Fortress.
Swan Bitcoin, for example, is working on a joint venture with BitGo to create a Bitcoin-only trust company in the U.S., which is pending regulatory approval. Fortress Trust provides custody of records for Swan. As the deal collapsed, Swan will no longer be involved in Ripple’s business in the country.
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