Ripple’s Second Acquisition of 2023: Purchase of Crypto Infrastructure Startup.
Cryptocurrency firm Ripple has made its second acquisition of 2023 by announcing its purchase of Fortress Trust, a startup specializing in crypto infrastructure. This move allows Ripple to broaden its scope beyond its primary focus on blockchain-enabled payments. The terms of the deal were not disclosed.
Fortress Trust, founded in 2021 by entrepreneur Scott Purcell, previously CEO of Prime Trust, offers solutions to facilitate interactions between large enterprises and digital currencies. This acquisition provides Ripple with a license in Nevada, opening up expansion opportunities.
Ripple is renowned for its role in facilitating cross-border payments through its blockchain-based messaging system, similar to SWIFT, which streamlines transactions between a network of banks and financial institutions.
The company has forged partnerships with prominent entities such as Modulr in the UK, Nium in Singapore, and SBI Remit in Japan. Additionally, Ripple employs XRP, a cryptocurrency in which it has a substantial stake, for cross-border payments among banks and financial institutions.
Despite this announcement, XRP’s price remained relatively stable, with a modest 0.4% increase in the past 24 hours, trading at 50 cents.
Ripple has faced challenges in recent years, particularly a lawsuit from the U.S. Securities and Exchange Commission (SEC). The lawsuit alleged that XRP should be considered a security and accused Ripple’s executives of conducting an illegal securities offering worth over $1 billion through XRP.
This legal battle led to the termination of Ripple’s partnership with MoneyGram in March 2021. However, in July of the same year, a judge ruled that XRP was “not necessarily a security on its face.”
Ripple’s business has been gaining momentum, especially outside the United States, where most of its clients are based. Stu Alderoty, Ripple’s Chief Legal Officer, expressed optimism that American banks would return to using Ripple’s ODL (On-Demand Liquidity) product following the favorable court ruling.
Fortress Trust is the second acquisition made by Ripple in 2023, following its purchase of Metaco, a Swiss provider of crypto custody services, for $250 million in May.
While the exact financial details of the Fortress Trust acquisition were not disclosed, Ripple confirmed that the deal is smaller in scale compared to the Metaco acquisition. Ripple was also a minority investor in Fortress Trust’s initial seed funding round.
Ripple has stated that this acquisition will enhance its existing business lines, particularly in improving customer experiences within its payment and liquidity solutions. Furthermore, the addition of Fortress Trust has granted Ripple a Nevada trust, adding to its growing list of regulatory permits worldwide.
This development allows Ripple to provide regulated services for fiat and cryptocurrency to specific customers in the United States.
In addition to the Nevada trust, Ripple already holds a New York BitLicense, which permits regulated virtual currency activities in the state of New York, as well as 30 money transmitter licenses across the United States.
The company has also received an in-principle Major Payment Institution License from the Monetary Authority of Singapore. Ripple has expressed its intent to obtain an e-money license from the Irish central bank in the future.
Ripple’s long-term vision includes leveraging the technology gained from this acquisition to support new initiatives on its roadmap and extend its services to a broader range of customers and use cases.
Ripple competes with several players within the “crypto custody” space, where the focus is on helping companies and individual users securely store their tokens in decentralized addresses without requiring extensive technical expertise.
Fortress Trust employs application programming interfaces (APIs) to enable companies to access data from various software applications, including those managing cryptocurrencies and non-fungible tokens (NFTs).
Fortress Trust’s clientele includes a wide range of industries, such as crypto exchanges, NFT marketplaces, tokenization platforms, corporate brands, agencies, securities exchanges, real estate, healthcare, neobanks, sports and entertainment celebrities, musicians, influencers, and other innovators.
In summary, Ripple’s acquisition of Fortress Trust in 2023 marks a strategic move to diversify its offerings beyond its core payments and blockchain solutions. This acquisition also strengthens Ripple’s regulatory standing and sets the stage for future growth in the cryptocurrency and blockchain industry.
