Fintech firm Ripple has decided to withdraw from its acquisition of Fortress Trust, a move that comes just 20 days after announcing the deal. Ripple CEO Brad Garlinghouse took to X (formerly Twitter) on September 28 to reveal the change in plans, stating that they will not proceed with the outright acquisition. However, Ripple will maintain its status as a shareholder in Fortress Trust's parent company, Blockchain technology.
The acquisition announcement on September 8 took many by surprise, including individuals within Ripple itself. Initially, Ripple's intentions included investments in other Fortress Group companies, including affiliate FortressPay. However, the speed of the acquisition was partially driven by a security incident involving a third-party analytics vendor, as disclosed by Fortress Trust shortly after the acquisition news broke. The breach resulted in losses ranging from $12 million to $15 million, primarily in Bitcoin, along with a smaller amount in USDC and Tether. Ripple, which had previously invested in Fortress during its 2022 seed round, will now be involved in efforts to recover customers' lost funds.
Fortress Trust's CEO, Scott Purcell, expressed that the canceled merger is not a significant setback. He clarified that the change in plans had no connection to the security incident, emphasizing that Ripple remains an investor in Fortress and maintains its partnership. Despite this, the failed deal could have implications for other companies linked to Fortress as Ripple continues its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC). For instance, Swan Bitcoin had been forming a joint venture with BitGo to establish a Bitcoin-only trust in the U.S., pending regulatory approval. Fortress Trust offered recordkeeping services to Swan, but with the acquisition's dissolution, Swan's involvement in Ripple's U.S. operations will cease.
