Nevada, U.S., orders crypto custodian 'Fortress Trust' to cease operations

The Nevada state financial regulator has ordered the virtual asset (cryptocurrency) custody firm Fortress Trust to cease operations. The move was made because the firm is unable to pay out customer deposits due to a lack of liquidity.

On the 23rd (local time), the Nevada Financial Institutions Division (FID) said, "Fortress's liquidity is wholly insufficient to meet its obligations to customers," issuing the order. Investigations found the company owes customers millions of dollars and effectively lacks the assets to satisfy withdrawal requests.

According to court filings, Fortress currently owes customers about $8 million in cash and about $4 million worth of virtual assets, but actually holds less than $200,000 in cash and only about $1 million in virtual assets. It was also confirmed that the company failed to submit basic accounting materials such as financial statements and account reconciliation records for July through September.

Anthony Botticella, chief executive officer (CEO) of Fortress Trust, stated in a court affidavit that "after taking office, I learned the company was unable to operate due to severe financial distress and problems that occurred under prior management," and that "previous deficiencies have had a material impact on Fortress's viability."

Earlier, Fortress was pursuing an acquisition by Ripple last year, but the deal fell through shortly after reports that it had suffered millions of dollars in losses from a hack. Fortress Trust has explained that the cause was not a direct hack but a security breach of an external third-party service.