Ripple Cancels $15 Million Deal with Fortress Trust

The post Ripple Cancels $15 Million Deal with Fortress Trust appeared first on Coinpedia Fintech News

It’s just 20 days, and Ripple abandons a $15M deal? The deal was seen as Ripple’s masterstroke as the Fortress Trust deal could have boosted Ripple’s regulatory licenses and standing in the US. Is the delayed crypto bill the cause, or is any significant change expected in today’s party? Let’s see what made Ripple change his mind at a time when the US govt shutdown is nearing. A change to boost adoption and without license in US regions, they are limiting XRP’s reach. 

Ripple Adandons $15M Deal but Stays as Investor

Ripple’s CEO, Brad Garlinghouse, confirmed this unexpected turn of events through a tweet, stating that although they had signed a letter of intent for the acquisition, they have now chosen not to proceed with the complete acquisition. However, Ripple will remain an investor in Fortress Trust.

Is it a Security Breach That Triggers Reevaluation

One of the significant reasons behind the cancellation of the deal is the recent security breach at Fortress Trust. On September 7, the company disclosed that four of its customers were affected by a hack that compromised one of its third-party vendors and cloud tools. Initially downplaying the incident, Fortress founder and CEO Scott Purcell admitted to a substantial loss of $12 million to $15 million in cryptocurrency due to the breach.

Ripple Steps In to Cover Loss

In response to the security breach, Ripple extended financial assistance to Fortress Trust, covering the multi-million-dollar loss. Notably, this information was not included in the initial acquisition announcement. So, if you think Ripple may face losses, certainly not. Bloomberg Reports suggest that Ripple is likely to recoup the $15 million it provided to Fortress Trust, as the company plans to reimburse Ripple once it retrieves funds from the third party involved in the hack.

Ripple’s internal Issues? 

Purcell spilled the beans on Ripple’s decision in his Bloomberg interview that internal divisions played a role in the breakdown of the acquisition deal. Some employees also reportedly expressed reservations about the plan, potentially contributing to the decision to withdraw from the acquisition.

Potential Implications for Other Companies

Ripple’s decision to pull out of the deal could have ramifications for other companies associated with Fortress Trust. Swan Bitcoin, currently engaged in a joint venture with BitGo to establish a Bitcoin-only trust company in the U.S., may see a shift in its business operations as its direct association with Fortress Trust through Ripple ceases.

Legal Battles Persist for Ripple

Despite this recent twist, Ripple grapples with a high-profile legal battle against the U.S. Securities and Exchange Commission. Ripple’s native token, XRP, has experienced a modest 0.3% boost in the last 24 hours, maintaining its position as the fifth-largest cryptocurrency in the market, trading at $0.5056.