Ripple has called off its deal to acquire crypto custodian Fortress Trust in a dramatic reversal—less than a month after signing a letter of intent. Ripple’s change of heart was apparently caused by an internal disagreement over business priorities and a “push back” from some of its employees and customers.
The ink hadn’t even dried on the merger when Ripple CEO Brad Garlinghouse broke the news on social media platform X, formerly known as Twitter, on September 28, 2023, saying his company no longer plans to acquire Fortress Trust.
However, Garlinghouse maintained that Ripple will remain an investor in Fortress Trust’s parent Fortress Financial Technologies. “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.
Earlier this month, Ripple said it had agreed to acquire Fortress Trust—allegedly to expand its portfolio of regulatory licenses in the United States. The announcement came less than a week after customers of Fortress Trust were hacked, with victims’ losses amounting to nearly $15 million.
Fortress was candid about the breach—and blamed the incident on a third-party vendor. As reports trickled in that Fortress suffered a security breach, Ripple came to the rescue of customers who fell victim to the hack—and absorbed their financial losses.
At the time, Ripple said it was already in talks to buy Fortress Trust, but the security incident accelerated the acquisition. However, within 20 days of signing a letter of intent, Ripple has backed out of the deal.
As per media reports, Fortress Trust CEO Scott Purcell appeared to downplay the merger’s cancellation, saying it “is not a big deal.” According to him, Ripple’s U-turn on the acquisition was not caused by the security breach. “They are an investor in Fortress and a great partner. Nothing changes there,” Purcell added.
Speaking to media about why Ripple pulled out of the deal, Purcell said Ripple wants to stick to its B2B focus and institutional global business while Fortress was “a way for them to diversify into B2B2C.” “Many on their team were super excited about our tech and customer base but others pushed back to stay the current course.”
It’s worth noting that Ripple is currently embroiled in a legal dispute with the U.S. Securities and Exchange Commission. In July, the company scored a partial win in its legal battle against the SEC, when a federal judge ruled that Ripple did not violate securities law in how it made available its XRP crypto tokens to retail traders on crypto exchanges. But dark clouds still loom as the SEC seeks to challenge that decision.
