In a sudden shift from its earlier intentions, financial technology firm Ripple has decided to abandon its direct acquisition of Fortress Trust. The announcement was made by Ripple's CEO Brad Garlinghouse on Thursday, September 28, 2023, nearly three weeks after the company had initially announced the acquisition on September 8, 2023.
Despite halting the acquisition, Ripple will continue to maintain its shareholder status in Fortress Blockchain Technologies, the parent company of Fortress Trust. The decision to not proceed with an outright acquisition was unexpected as the plans had surprised even Ripple insiders.
The initial announcement of Ripple's intent to acquire Fortress Trust had generated considerable attention within the cryptocurrency community. The acquisition was seen as an ideal fit for Ripple’s expansion plans in the U.S., particularly due to the Nevada Trust license held by Fortress.
However, following a security incident involving a third-party analytics vendor that resulted in a loss of $12 million to $15 million for Fortress Trust, Ripple had to step in to compensate customers. A majority of the lost funds were Bitcoin (BTC), with minor amounts in USD Coin (USDC) and Tether (USDT).
Despite this setback, Scott Purcell, CEO of Fortress Trust, stated that the cancellation of the merger was "not a big deal" and unrelated to the security incident. He affirmed that Ripple remains a valued investor and partner in Fortress.
Ripple's decision to pull out of the deal may create opportunities for other companies linked to Fortress. Swan Bitcoin is currently working on a joint venture with BitGo to establish a Bitcoin-only trust company in the U.S., pending regulatory approval. As Ripple's direct involvement with Fortress Trust has ceased, Swan will no longer be part of Ripple's business operations in the country.
Meanwhile, Ripple continues its high-profile legal battle with the United States Securities and Exchange Commission. Despite its underperformance in the past 24 hours, with a modest 0.3% increase, Ripple's token XRP maintains its position as the fifth-largest cryptocurrency in the market, trading at $0.5056.
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