Crypto company Ripple backs out of Fortress Trust purchase

LESS than a month after Ripple said it had agreed to acquire custodian Fortress Trust, the crypto company is backing out of the deal.

“While this outcome is different from what was originally planned, we’ll continue to support them and hope to work together in the future!” Ripple chief executive officer Brad Garlinghouse wrote in a post on X, the platform formerly known as Twitter.

Ripple will remain an investor in Fortress Financial Technologies, the parent of the Nevada-based chartered trust company, Garlinghouse said in the post on X.

Ripple said on Sep 8 that it intended to acquire Fortress Trust, which also provides wallets and payments services.

Four days later, Fortune published a story saying that Fortress Trust had “lost between US$12 to US$15 million in crypto in a recent hack”. The story quoted Scott Purcell, founder and CEO of Fortress Trust, saying only “four customers out of 225,000 customers” were affected.

In a text message to Bloomberg, Purcell said a third-party service had experienced a security breach but that his company had not itself been hacked, and that “6 out of Fortress’s 250,000+ customers used it to log into their accounts”.

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The hackers “stole US$15 million from those accounts”, according to Purcell. “Ripple wired in US$15 million so we could do the right thing and make those accounts whole. Zero customer impact or losses,” he added.

Ripple may have to wait to get that US$15 million back, Purcell said. “At some point, we will pay them back, likely when we collect” from the third party that experienced the hack, he said.

Purcell also offered his perspective on the breakdown, saying that while some on the Ripple team were “super excited” about the technology and customer base at Fortress Trust, “others pushed back”.

Ripple declined to comment beyond Garlinghouse’s post on X.

The collapse of the deal comes mere weeks after BitGo backed out of a similar deal to buy custodian Prime Trust, of which Purcell is a former CEO.

Prime had been placed in receivership this summer and has faced allegations of losing access to digital wallets containing tens of millions of US dollars worth of assets, and of using customer funds to meet withdrawals. BLOOMBERG