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- Although Ripple has decided not to proceed with the acquisition of crypto custodian Fortress Trust, it will retain its investment.
- The decision comes after Fortress Trust suffered a crypto hack that affected a small number of its customers.
Blockchain startup Ripple has cleared its stand over the acquisition of its Nevada-based chartered trust company Fortress Trust. Less than a month after Ripple agreed to acquire the crypto custodian, the company has decided to back out of the deal.
Ripple Chief Executive Officer Brad Garlinghouse also spoke about the development. He wrote: “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”.
Ripple intends to retain its investment in Fortress Financial Technologies, the parent company of the chartered trust firm located in Nevada. Garlinghouse affirmed this commitment in the post on X.
Ripple’s Switch of Plans
On September 8, Ripple announced its intention to acquire Fortress Trust, a provider of wallets and payment services. However, just four days later, a Fortune article reported that Fortress Trust had experienced a crypto hack resulting in a loss of $12 to $15 million.
Scott Purcell, the CEO of Fortress Trust, clarified that this incident affected only “four customers out of 225,000 customers.” He explained that a third-party service had suffered a security breach, and six of Fortress’s 250,000+ customers used it to access their accounts.
The hackers stole $15 million from these accounts, which prompted Ripple to send $15 million to compensate the affected users, ensuring no customer losses. Purcell noted that they would likely repay Ripple once they collect from the third party responsible for the hack.
He also mentioned that there were varying perspectives within the Ripple team regarding the acquisition of Fortress Trust, with some expressing excitement about the technology and customer base while others had reservations.
The deal’s collapse follows BitGo’s withdrawal from a similar agreement to acquire Prime Trust, where Scott Purcell had previously served as CEO. Prime Trust had entered receivership earlier in the summer amid accusations of losing access to digital wallets holding assets worth tens of millions of dollars and utilizing customer funds to fulfill withdrawal requests.
Ripple to Focus on IPO
The excitement surrounding Ripple’s valuation and IPO rumors continues to grow especially during Ripple’s Proper Party. Financial expert Linda P. Jones has shed light on the potential for Ripple’s stock value to surge following an IPO, drawing parallels to Coinbase’s successful IPO journey.
Jones suggests that the significant legal clarity surrounding Ripple and the substantial XRP reserves in escrow could drive Ripple’s post-IPO valuation to mirror or even exceed the trajectory seen by Coinbase.
Some market analysts believe that if Ripple IPO goes through, the company’s valuation can skyrocket significantly with the probability of XRP price shooting to $39.
