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Scott Purcell, the founder and CEO of the embattled crypto custodian Fortress, has stepped down amid broader staffing points.
The choice comes on the heels of a hacking incident in early September that noticed Fortress lose between $14 million and $15 million of buyer funds. Shoppers had been later made whole by Ripple, the blockchain agency behind the favored cryptocurrency XRP.
Fortress additionally laid off at the least six workers, the bulk in gross sales, Fortune has discovered. When reached for remark, Purcell confirmed his departure, saying Fortress has employed a brand new CEO—the previous COO of the crypto funding agency iTrustCapital, based on an announcement posted to LinkedIn on Monday. Purcell instructed Fortune he’ll stay a board member of Fortress’s guardian firm.
Purcell has a rocky file within the digital asset house. He beforehand was the CEO of Prime Belief, a distinct crypto custodial service, or enterprise that holds crypto property equivalent to Bitcoin on behalf of purchasers. In July, Prime Belief went into receivership with the Nevada Monetary Establishments Division, and it declared chapter in August. Purcell had stepped down as CEO of the corporate as of 2021.
In response to the receivership petition filed by the Nevada regulator, Prime Belief discovered it was unable to entry a number of the wallets storing consumer cryptocurrency in December 2021, allegedly then utilizing buyer funds to fulfill withdrawals.
Fortress falling
Purcell based Fortress in October 2021, with the agency turning into a serious participant within the custodial house. Its development was derailed over the summer time when hackers stole hundreds of thousands of {dollars} value of crypto property, principally in Bitcoin. Purcell later instructed Fortune that the incident affected solely six out of the corporate’s 225,000 clients.
Earlier than the hack was publicly acknowledged, Ripple had introduced its deliberate acquisition of Fortress, citing the agency’s Nevada belief license as one of many causes for the acquisition. The crypto business publication The Block reported that Ripple had stepped in to make clients entire as a part of the acquisition.
Ripple abandoned the acquisition plan in late September. Purcell mentioned a subset of Ripple workers weren’t focused on diversifying to consumer-focused merchandise. (Fortress’s crypto rails let banks, for instance, provide retail clients the flexibility to purchase Bitcoin by means of their IRAs.) A spokesperson for Ripple instructed Fortune that the choice to again out of the acquisition was “not because of the hack or how Scott dealt with it” and mentioned that Ripple will stay an investor in Fortress.
Though it backed out of the deal, Ripple has not required Fortress to instantly return the cash—primarily a mortgage—it gave the custodial agency to make clients entire. “They’re not stressing out about it,” Purcell mentioned, “and neither am I.”
Shortly after information broke of Ripple backing out, Purcell mentioned Fortress had laid off 4 members of its gross sales group in addition to a number of different workers. He later mentioned the corporate had since employed again an equal quantity.
As for Purcell’s subsequent enterprise, based on his LinkedIn, he based a startup earlier this month that’s in stealth mode.
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