Fintech behemoth Ripple has rescinded its decision to acquire Fortress Trust, merely 20 days after the initial announcement. This decision came to light on September 28, when Ripple’s CEO, Brad Garlinghouse, elucidated that an outright acquisition is off the table, although Ripple’s stake in Fortress Blockchain Technologies, the parent entity of Fortress Trust, remains unaffected.
Unraveling the Ripple and Fortress Trust Deal
On September 8, Ripple had unveiled its intentions to acquire Fortress Trust to broaden its licensing spectrum in the United States. This revelation, unexpected even among Ripple insiders, according to Cointelegraph, was part of a broader scheme to invest in various Fortress group entities, including the affiliated FortressPay.
A mere few days post this announcement, Fortress Trust brought to light a security breach by a third-party analytics vendor. That resulted in a loss ranging between $12 million to $15 million, predominantly in Bitcoin, USDT, and USDC. Consequently, Ripple, an early-stage investor in Fortress since 2022, intervened to repay the affected customers.
This retraction could potentially catalyze other enterprises associated with Fortress.
Swan Bitcoin is in the throes of forging a partnership with BitGo, aiming to establish a Bitcoin-centric trust entity in the US, awaiting regulatory nod. Given that Fortress Trust was the custodian of records for Swan, this collapse of the deal with Ripple inevitably disentangles Swan from Ripple’s business ventures in the US.
The Aftermath and Looking Ahead
Despite the merger’s discontinuation, Fortress CEO Scott Purcell downplayed the situation, stating the cancellation “is not a big deal”. He further emphasized that this change in trajectory is unrelated to the security mentioned above mishap.
The rapport between Ripple and Fortress remains strong, with Purcell affirming, “They are an investor in Fortress and a great partner. Nothing changes there.”
This unexpected twist in the Ripple-Fortress narrative reflects the intricate and dynamic nature of the fintech realm.
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