In a surprising turn of events, cryptocurrency payment giant Ripple has stepped in to alleviate the losses faced by Fortress Trust’s customers, a blockchain infrastructure startup. This strategic move is closely linked to Ripple’s aspirations to acquire Fortress Trust, prompting inquiries into the thoroughness of the due diligence process. However, concerns raised by Bill Morgan on Twitter suggest speculation about whether Ripple’s actions, potentially involving selling XRP to fund the acquisition, contributed to a downward price impact on XRP.
I wouldn’t want to think that Ripple sold a lot of XRP to fund this acquisition and bailing out of Fortress customers putting downward price pressure on XRP. But that couldn’t be the cause of the price fall today as the whole crypto market fell. https://t.co/siWkXpXL5M
— bill morgan (@Belisarius2020) September 11, 2023
In a reassuring tweet issued last week, Fortress Trust acknowledged that four of its valued customers had indeed been affected by a security incident involving a compromised third-party vendor’s cloud tools. However, the tweet swiftly alleviated any concerns, highlighting the fact that the breach had not extended to Fortress Technology or its internal systems.
Last week, 4 Fortress customers were impacted by a third-party vendor whose cloud tools were compromised. Thankfully there is no breach within Fortress Technology or systems, impacted accounts were fully restored, and most importantly, of course, there is no loss of funds.
— Fortress IO (@Fortress_io) September 7, 2023
Ripple’s decision to step in and reimburse Fortress Trust’s customers came just one day after the acquisition announcement on September 8. Brad Garlinghouse, Ripple’s CEO, expressed his excitement about the deal, emphasizing the importance of Fortress Trust’s technology in bolstering Ripple’s presence in critical areas of the crypto infrastructure.
This unexpected twist in the acquisition saga follows Ripple’s initial involvement with Fortress Blockchain Technologies back in 2022 when Ripple participated in the startup’s seed round. While the acquisition awaits regulatory and due diligence approvals, Ripple has plans to invest in Fortress Blockchain Technologies, the parent company of Fortress Trust.
Ripple’s aggressive acquisition strategy in 2023 has been gaining attention. The company previously spent $250 million on acquiring Metaco, a custody startup, and also acquired a stake in the popular crypto exchange Bitstamp.
It’s worth noting that despite Fortress Trust using BitGo for custody of some of its bitcoin and digital assets, BitGo was not affected by the security breach. The assets held at BitGo remained safe from the third-party integration issue that led to the security incident.
As the crypto community observes Ripple’s expansion, some prominent figures, including crypto Key Opinion Leaders (KOLs) like Parrot Capital, have raised questions about the level of due diligence conducted by Ripple in this acquisition. The crypto industry would be watching closely as the deal progresses through regulatory channels and Ripple’s continued efforts to solidify its position in the crypto space.
