CEO Brad Garlinghouse, at the helm of Ripple, took to X, their chosen platform for communication, to deliver a surprising update. In a twist of events just within 20 days of unveiling their intent to acquire Fortress Trust, Ripple, a prominent player in the financial technology sector, has decided to withdraw from the proposed transaction.
In an announcement posted by Ripple’s CEO Brad Garlinghouse on X (formerly known as Twitter), dated September 28, the unexpected decision was unveiled: “we’ve since made the decision not to move forward with an outright acquisition.” However, it’s essential to note that Ripple is not severing all ties; they will maintain their status as a shareholder in Fortress Trust’s parent company, Fortress Blockchain Technologies.
The initial revelation of Ripple’s acquisition plan on September 8 was met with widespread surprise, even among insiders at the company, as per reports from Cointelegraph. At the time, Ripple had outlined broader intentions, expressing a desire to invest in other companies within the Fortress group, including their affiliated entity, FortressPay.
However, this narrative took an abrupt turn a few days later when Fortress Trust acknowledged that the acquisition had been expedited due to a security incident involving a third-party analytics vendor. Speaking with Fortune, Fortress CEO Scott Purcell disclosed that the attack had inflicted a substantial financial blow, resulting in losses ranging from $12 million to $15 million, primarily comprised of Bitcoin, along with minor holdings of USD Coin and Tether. It was at this juncture that Ripple, a long-standing investor in Fortress since its inception in 2022, stepped in to remediate the losses incurred by customers.
In remarks provided to Cointelegraph, Purcell attempted to downplay the significance of the merger’s cancellation, asserting that “it’s not a big deal.” He clarified that the decision had no direct connection to the security incident, stating, “They are an investor in Fortress and a valuable partner. Nothing changes there,” signaling continuity in their partnership.
Despite attempts to obtain insights from Ripple, the company declined to provide additional comments beyond the CEO’s public statement. This development occurs in the backdrop of Ripple’s ongoing high-stakes legal battle with the United States Securities and Exchange Commission, adding a layer of complexity to the situation. However, it’s worth noting that this turn of events could potentially have far-reaching implications, benefiting other enterprises with ties to Fortress.
For instance, Swan Bitcoin, in collaboration with BitGo, has been diligently working towards establishing a Bitcoin-exclusive trust company within the United States. This venture is currently pending regulatory approval. Fortress Trust, prior to the dissolution of the Ripple deal, had a role in safeguarding records for Swan. However, with the deal’s termination, Swan’s involvement in Ripple’s U.S. operations comes to an end.