According to the social networks of its CEO, Ripple has opted to withdraw from the planned acquisition of Fortress Trust, a Nevada-based fiduciary company, just a few weeks after expressing initial interest in the acquisition.
This news has generated significant buzz in the world of cryptocurrencies and blockchain technology. The original idea behind the acquisition was for Ripple to apply its advanced payment technology to enhance the services offered by Fortress Trust, particularly through FortressPay. Moreover, the operation had the potential to significantly expand Ripple’s licensing portfolio in the United States by leveraging the valuable Nevada fiduciary license held by Fortress Trust.
The decision does not mean a complete exit from Fortress Trust
Ripple’s CEO, Brad Garlinghouse, has announced that, despite the cancellation, the company will maintain its investment in Fortress Trust. Garlinghouse has praised the solid team at Fortress Trust and their high-value products, reaffirming Ripple’s ongoing support and hope for future collaborations.
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’s decision to withdraw from the acquisition was due to a security incident. It was discovered that one of Fortress Trust’s external providers, Retool, fell victim to a sophisticated phishing attack. Ripple assumed the losses suffered by the affected customers of Fortress Trust as part of the original acquisition agreement.
The initial disclosure of the security breach was made on September 7th by Fortress, without naming the affected external provider. The following day, Ripple, which was already a minority investor in Fortress, announced its intention to acquire the custodial company. According to Ripple, the incident expedited acquisition discussions as they swiftly acted to ensure customer protection.
It is important to note that BitGo and Fireblocks, the wallet providers used by Fortress, confirmed that their systems were not compromised. Mike Belshe, CEO of BitGo, criticized Fortress’s handling of the situation for not immediately disclosing all details and emphasized that his company was not involved in the breach.
I can’t express enough how upsetting this Fortress Trust episode is to me. I really don’t want to talk about it at all, because it actually has nothing to do with BitGo. But because Fortress was not forthcoming about what actually did happen, we are now indirectly affected -… https://t.co/jXZYGBt93B
— Mike Belshe (@mikebelshe) September 11, 2023
Ripple has decided not to acquire Fortress Trust after initially expressing interest, while maintaining its investment in the company. This decision stemmed from internal disagreements and was hastened by a security incident involving an external provider. Both companies will continue to collaborate, raising questions about Ripple’s growth strategy in the U.S. market.
