Ripple has withdrawn its interest in acquiring Fortress Trust, a business providing tech and regulatory infrastructure, just three weeks after its announcement. According to Ripple CEO Brad Garlinghouse, the company will continue to invest in Fortress Trust. He made the statement on X (previously Twitter).
No additional information was supplied regarding the choice to abandon the Fortress acquisition by Ripple or Garlinghouse. In a subsequent post, Garlinghouse commended the Fortress Trust team and pledged to maintain Ripple’s assistance. He stated:
“The Fortress team is incredibly talented, and has built products solving real customer problems. While this outcome differs from what was originally planned, we’ll continue supporting them and hope to work together in the future!”
Deal Between Ripple and Fortress
Early this month, Ripple announced the purchase of Fortress to increase the number of US regulatory licenses in its collection. Using its Nevada Trust license, Fortress Trust is authorized to custody money. Fortress Trust received a seed round investment from Ripple last year. No financial information about the investment was disclosed by either party. An advantage of the planned acquisition is its ability to draw investors in addition to regulatory expansion.
Following the acquisition’s announcement, Ripple promised to make up any damages suffered by clients as a result of a recent hack. Fortress Trust lost around $15 million due to a phishing hack, which the business blamed on a fault with a third-party vendor. Fortress did not name the vendor in a post on X.
However, it did disclose that the problem was caused by a breach of the company’s cloud tools. The post also stated that the breach impacted 4 Fortress customers.
Retool, a software startup with headquarters in San Francisco, is the unidentified vendor, according to a CoinDesk story. According to the paper, the hack inspired Fortress Trust to advance its acquisition strategy.
Ripple’s Legal Issues
Regarding a case initially filed in 2020, Ripple is still at odds with the Securities and Exchange Commission of the United States (SEC). The sale of XRP tokens worth $1.3 billion, in the SEC’s opinion, was illegal under federal securities laws. But in July, a US District Judge declared that XRP did not meet the Howey Test and did not qualify for security classification. The cost of XRP increased by nearly 70% to $0.7938 in just 24 hours after the decision. But since then, XRP’s price has adjusted. XRP’s price is $0.5088 as of this writing.
After the decision, SEC Chair Gary Gensler expressed disappointment in the court’s decision and urged an appeal. Then, the Commission asked for permission to bring an interlocutory appeal; however, consent is yet to be granted.
According to Ripple president Monica Long, the company’s legal issues in the US may provide the impetus for international expansion. She mentioned this in a recent interview. According to Long, the decision gives the blockchain startup a fantastic opportunity to expand outside the US. However, Long and Garlinghouse have not made any statements on a potential expansion.