San Francisco-based financial technology firm Ripple (XRP), which has been in the headlines amid its ongoing legal skirmish with the US Securities and Exchange Commission (SEC), came to the rescue of customers of blockchain infrastructure startup Fortress Trust, who lost funds due to a security breach, as part of the acquisition deal.
Fortress is a Nevada-headquartered chartered trust company, which specializes in Web 3.0 and crypto space, and provides regulatory and technology infrastructure to blockchain firms. Earlier this month, Ripple acquired Fortress for an undisclosed sum, expanding its portfolio of regulatory licenses in the US.
On September 7, Fortress made a big announcement on X, formerly known as Twitter, saying that its customers had been hit by a “third-party vendor whose cloud tools were compromised”—but that their funds remained guarded.
According to a media report, it was, in fact, Ripple that covered the financial losses incurred by customers as part of a deal to acquire Fortress that gained momentum after the incident.
“Conversations accelerated last week following the security incident via a third-party analytics vendor, but this opportunity makes sense for Ripple in the long term,” a Ripple spokesperson said. The spokesperson clarified that Ripple, who held minority shares in Fortress earlier, was already in talks to acquire the blockchain infrastructure firm when the security breach happened.
“Luckily, Ripple was in a position to act quickly to step in and make customers whole, and there have been no breaches to Fortress technology or systems. Fortress notified customers immediately of the incident when it happened — as they mentioned in their tweets,” the spokesperson added.
With Ripple’s spokesperson declining to provide details of the wallets or customers that were affected, the exact amount of funds and crypto that customers lost in the security incident remains unknown.
Following the incident, Fortress said in a statement that it had “terminated the vendor integration” with immediate effect, and temporarily suspended accounts “to assess and ensure system-wide security.”
Ripple announced its acquisition of Fortress Trust on September 8, a day after the security incident took place, with the deal awaiting regulatory and due-diligence approvals. Ripple reportedly plans to continue to infuse money into Fortress and its FortressPay services, which will now employ Ripple’s payments technology.
Ripple has been on a shopping spree this year, having acquired Fortress Trust last week, Swiss custody startup Metaco for $250 million in May. In addition, it has also bought some shares of crypto exchange Bitstamp. 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.