In a surprising twist of events, Ripple has opted to veer away from its initial plan to outright acquire Nevada-based chartered trust company, Fortress Trust. Ripple’s CEO, Brad Garlinghouse, confirmed this shift in strategy, emphasizing the company’s continued support for Fortress Trust and leaving the door open for future collaborations.
A Change in Direction for Ripple
Just a few weeks ago, Ripple had signed a letter of intent signaling its intention to acquire Fortress Trust. However, it has now chosen not to proceed with a complete acquisition, though it remains committed as an investor in the company.
The saga began on September 8th when Ripple initially announced its plan to acquire Fortress Trust, albeit without disclosing the financial details. Sources with insider knowledge at the time had suggested that the acquisition’s price tag would be below the $250 million Ripple had paid for custody firm Metaco earlier in May.
The Accelerating Factors for Ripple
Fortress Trust made headlines on the eve of Ripple’s announcement when it disclosed a substantial theft of customers’ cryptocurrency, amounting to nearly $15 million. The blame for this unfortunate incident was attributed to an unnamed third-party vendor that had fallen victim to a phishing attack. Subsequently, CoinDesk revealed that this vendor was Retool, a San Francisco-based company with Fortune 500 clients, which had developed a portal for several Fortress clients to access their funds. Ripple clarified that the acquisition discussions had been initiated before this theft but had been expedited due to the incident.
Fortress Trust specializes in providing financial and regulatory infrastructure solutions for blockchain companies. It was founded by Scott Purcell, a prominent figure in the industry who had served as the CEO of crypto custodian Prime Trust until 2020. Notably, Prime Trust faced its own challenges after BitGo terminated its planned acquisition of the firm, leading to its entry into receivership.
The Way Forward
Despite the change in plans, Ripple holds a positive view of Fortress Trust and its capabilities. Garlinghouse acknowledged the exceptional talent within the Fortress team and their track record of developing solutions to address real customer problems. While the outcome differs from the original plan, Ripple expressed its intention to continue supporting Fortress Trust and explore potential collaborations in the future.
This strategic shift underscores the dynamic nature of the crypto industry, where companies must adapt swiftly to evolving circumstances and prioritize the security of their investments and partnerships.