Nevada Halts Fortress Trust Operations Amid Insolvency Crisis

Highlights:

• Fortress Trust was shut down due to insolvency and unsafe operations.
• The company owed $12 million, yet had less than $1.2 million in assets.
• The cease-and-desist order was issued by Nevada following months of missing reports.

Regulators in Nevada have issued an order that crypto firm Fortress Trust cease operations. According to a Bloomberg report, the cease-and-desist was issued against Bradbury by the Financial Institutions Division (FID) on October 22 because of the firm’s inability to satisfy customer withdrawals due to severe liquidity problems.

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Court documents reveal a significant asset deficit both in cash and digital asset holdings. The company holds total assets of less than $1.2 million. However, it owes customers almost $12 million in both fiat and crypto. This move comes after there have been increasing concerns about digital asset custodians in the U.S. There is pressure in the industry to enhance transparency and solvency reporting. The most recent victim of increased regulation by regulators is Fortress Trust.

Fortress Trust Nears Insolvency Amid Massive Asset-Liability Mismatch

Fortress Trust, a digital-asset custodian, is teetering on the brink of insolvency due to a substantial asset-liability mismatch revealed in court filings. The renamed Elemental Financial Technologies has… pic.twitter.com/WmSLbhRTNK

— Chloe | KeyPro ◾️ (@Chloe_HashKey) October 23, 2025

Fortress Trust Faces Liquidity Crisis

Fortress Trust changed its name to Elemental Financial Technologies earlier this year. Its financial position was not much enhanced by the name change. Authorities allege that the company did not file the necessary financial statements within several months. Regulators allege that it failed to submit reconciliations or monthly reports between July and September. The FID classified this inadequacy of transparency as a serious danger to clients.

Previous warnings to rectify its practices were also allegedly ignored by the company. Regulators now believe that there could be further structural issues. The investigators have initiated probes into possible fraud and mismanagement. CEO Anthony Botticella publicly disclosed internal difficulties in an affidavit. He said, “Once in power, I discovered that the company could not run because it was in severe financial trouble.” Botticella attributed the declining viability of the company to the previous leadership.

The order issued by the FID leaves Fortress Trust unable to accept deposits and withdrawals. It also does not allow the firm to provide money transmission and custody services. Violation of the order by Fortress may result in civil penalties up to $10,000 per violation.

Failed Acquisition and Wider Crypto Sector Impact

In 2023, Fortress Trust came close to finalizing a $15 million acquisition deal with Ripple Labs. However, the deal failed after a third-party security breach, causing Fortress massive financial losses. Although Fortress insisted that the breach was an external issue, the damage was enough to question its infrastructure. Regulatory authorities in other states, such as Connecticut and Maine, started paying close attention to the company.

A few weeks ago, we signed a letter of intent to acquire Fortress Trust – we’ve since made the decision not to move forward with an outright acquisition, though Ripple will remain an investor in @Fortress_io.

— Brad Garlinghouse (@bgarlinghouse) September 28, 2023

The Nevada order becomes an addition to the growing concerns in the crypto custody industry. The sector has experienced multiple failures related to poor solvency management. Fortress Trust has formerly served more than 250,000 users. Some of its clients were crypto platforms and pension holders.

Scott Purcell, the founder of the firm, also launched Prime Trust, which collapsed in 2023. That collapse left more than $80 million of customer money stuck. The Fortress situation is being seen by many as a repeat scenario.

Expanding oversight on Crypto Custodians

The SEC and regulators in New York issued updated guidelines on custody on September 30. Such regulations need increased transparency in disclosures of blockchain risks and smart contracts. These increased standards might be difficult for smaller custodians to operate.

Furthermore, an April SEC roundtable raised the issue of untested infrastructure in the crypto sector. Officials argued over whether digital assets require special custodians. The latest move in Nevada fits into the scope of enhanced enforcement. Earlier this month, a federal court affirmed a prohibition on event-based betting by Crypto.com in the state.

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