Ripple’s partial victory against the US Securities and Exchange Commission (SEC) has propelled the firm to optimize its market operations. Lately, Ripple has made strategic moves to broaden its spheres of influence.
A few weeks ago, Ripple announced plans to acquire the Nevada-based fintech company Fortress Trust to introduce institutional liquidity services. Days after the announcement, Ripple has agreed to cancel the acquisition deal with Fortress Trust.
Ripple Pulls Back From Acquiring Fortress Trust
A statement conveyed by the chief executive of Ripple, Brad Garlinghouse, stated that after careful consideration, the network has agreed to prioritize outright acquisition that perfectly blends with its expansion plan.
The decision came 20 days before the Fortress mergers and acquisition deal (M&A) was closed. Despite the change in plans, Ripple will retain its shareholder position in Fortress Blockchain Technologies, the parent company of Fortress Trust.
For years, Ripple has supported Fortress to create more value for its customers and build its brand. In 2022, Ripple supported Fortress Technologies to generate $22.5 million in its seed funding round.
Review of Ripple Expansion Plan
A review of the Ripple expansion plan demonstrated that the acquisition of Fortress aimed at expanding its portfolio in the regulatory license in the US. In the M&A deal, Ripple had planned to invest heavily in Fortress affiliate companies, including Fortress Pay and Fortress Group.
News concerning the acquisition deal caught many by surprise since days before the announcement; Ripple had revealed plans to acquire the Switzerland-based crypto custodial company Metaco at $ 250 million. The acquisition of Metaco aimed at enabling Ripple to meet the growing demand for custodial services among institutional clients.
At that time, the Metaco acquisition deal sought to position Ripple as the leading company with the largest acquisition in the Web3 sector. This implies despite efforts to redefine the payment and remittance systems Ripple seeks to bring the masses to the Web3 and crypto sector.
Ripple’s Strategic Acquisation Fails
Even though the Fortress acquisition deal did not go as planned, Ripple plans to deploy a custody-based mechanism to introduce institutional liquidity products to the crypto sector. It also attempts to increase institutional participation in the crypto industry through pursuing strategic partnerships.
In a recent interview with Fortune, the Fortress team confessed the M&A deal with Ripple was decided hurriedly. The fintech company told the media that a recent security incident caused by an intermediary vendor challenged the firm to pursue the M&A deal.
Addressing the Fortune, the chief executive of Fortress Scott Purcell lamented that during the attack, the company lost roughly $12 million to around $15 million. The CEO stated that Fortress lost a substantial amount of assets in Bitcoin (BTC), USD Coin (USDC), and Tether (USDT) to the attacker.
Commenting on the termination of the M&A deal, Purcell argued that the pulling back of Ripple was not a big deal. The CEO explained that the security breach incident and the merger cancellation were unrelated.
The executive acknowledged that Ripple would remain an investor in Fortress and a great partner. Purcell argued that despite the changes, there will be minimal impact on the relationship between Ripple and Fortress.
Even though the Ripple and Fortress deal failed to go as planned, XRP portrayed a bullish momentum in its price front. At press time 07:15 UTC, Ripples native token (XRP) surged by 1.88% to trade at $0.5072, according to CoinMarketCap.
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