Ripple has decided to cancel its planned acquisition of Fortress Trust, a custodian company, less than a month after initially announcing the agreement.
Ripple CEO Brad Garlinghouse made the announcement in a post on X, formerly known as Twitter, stating that they will not move forward with the outright acquisition. Instead, the XRP issuer will remain a shareholder in Fortress Trust’s parent company, Fortress Blockchain Technologies.
A few days after announcing the acquisition, Fortress CEO Scott Purcell revealed that the decision was rushed due to a security incident involving a third-party analytics vendor. This incident led to a loss of $12 million to $15 million, primarily in Bitcoin (BTC), along with small amounts of USD Coin (USDC) and Tether (USDT). Ripple stepped in to compensate customers for these losses.
“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!” Garlinghouse wrote.
Founded in 2021 by Scott Purcell, an entrepreneur with a background in equity and debt crowdfunding, Fortress Trust is on a mission to assist large enterprises in navigating the complexities of digital currencies.
What made the potential acquisition particularly noteworthy is that it would have granted Ripple a license in Nevada, which opens up new regulatory possibilities for the company. It also allows the XRP issuer to extend its range of regulated services, catering to both fiat and crypto, for specific customers within the United States.
While the exact financial specifics of Ripple’s failed acquisition of Fortress Trust have been kept under wraps, insiders familiar with the matter have hinted that the price tag for this deal falls below the $250 million that Ripple shelled out for Metaco, a custody services company, back in May.
The move also came as more private and public entities are showing interest in adopting Ripple’s products after a landmark ruling determined its XRP token was not necessarily a security. However, the court also determined that XRP can be considered a security when sold to institutional investors, meeting the conditions set by the Howey Test.
Ripple sees this court decision as a victory and a positive development for its growth in the US market. With its legal position clarified, the company is now looking to expand its operations by seeking the necessary regulatory licenses for conducting crypto-related activities.