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Ripple's CEO, Brad Garlinghouse, took to Twitter to confirm this unexpected twist, stating that despite having signed a letter of intent for the acquisition, they have opted not to proceed with the full acquisition. However, Ripple will continue to be an investor in Fortress Trust.
Also Read: XRP's Journey: Can It Really Reach $1,000 in Value?
Did a Security Breach Play a Role?
One of the primary factors leading to the cancellation of the deal was a recent security breach at Fortress Trust. On September 7th, the company disclosed that a hack had compromised four of its customers, originating from a breach of one of its third-party vendors and cloud tools. Initially downplaying the incident, Fortress's founder and CEO, Scott Purcell, later admitted to a substantial loss, estimated between $12 million to $15 million in cryptocurrency, due to the breach.
In response to this security breach, Ripple extended a helping hand to Fortress Trust by covering the multi-million-dollar loss. It's worth noting that this information was not part of the initial acquisition announcement. For those concerned about Ripple's potential losses, there's reason to believe they will recover the $15 million, as reports from Bloomberg suggest that Fortress Trust intends to reimburse Ripple once it recovers the funds from the third party involved in the hack.
Also Read: BlackRock's Speculated Shift: Bitcoin to XRP - Implications Unveiled
Internal Issues Within Fortress Trust
Scott Purcell revealed in a Bloomberg interview that internal divisions within Fortress Trust played a significant role in the breakdown of the acquisition deal. Some employees had expressed reservations about the plan, possibly influencing Ripple's decision to withdraw from the acquisition.
Ripple's choice to pull out of the deal could have ripple effects (pun intended) on other companies associated with Fortress Trust. For instance, Swan Bitcoin, currently in a joint venture with BitGo to establish a Bitcoin-only trust company in the U.S., may need to reassess its business operations as its direct association with Fortress Trust through Ripple comes to an end.
The XRP Price Amidst the Turmoil
In addition to this recent twist, Ripple continues to face off against the U.S. Securities and Exchange Commission in a high-stakes legal battle. Ripple's native token, XRP, has seen a modest 0.3% boost in the last 24 hours, maintaining its position as the fifth-largest cryptocurrency in the market, with a current trading price of $0.5056.
Ripple's surprising decision to step away from a significant acquisition deal with Fortress Trust raises questions about the dynamics within the company and the broader implications for its partners. As Ripple navigates both internal and external challenges, the cryptocurrency world watches closely to see how these developments will shape its future.
Also Read: Choosing Between XRP and Shiba Inu: A Guide to Your Crypto Investment
FAQs
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Why did Ripple cancel the $15 million deal with Fortress Trust?
Ripple cited various reasons, including a security breach at Fortress Trust and internal divisions within the company as contributing factors.
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Will Ripple recover the funds it covered for Fortress Trust's losses?
Reports suggest that Ripple is likely to be reimbursed by Fortress Trust once the funds are recovered from the third party involved in the hack.
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How has Ripple's decision affected other companies connected to Fortress Trust?
Companies like Swan Bitcoin, in a joint venture with BitGo, may need to reconsider their business operations as their association with Fortress Trust via Ripple comes to an end.
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What is the current status of Ripple's legal battle with the SEC?
Ripple is still engaged in a high-stakes legal battle with the U.S. Securities and Exchange Commission.
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What is the current price of Ripple's native token, XRP?
XRP is trading at $0.5056 at the moment, experiencing a modest 0.3% increase in the last 24 hours.
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