Nevada’s Financial Institutions Division (FID) has ordered Fortress Trust, now operating under the name Elemental Financial Technologies, to halt operations following the discovery of severe liquidity gaps that jeopardise client assets. The cease-and-desist order, issued on October 22, accuses the company of being insolvent and engaging in “unsafe and unsound” practices that left it unable to meet customer withdrawals.
According to Bloomberg, Fortress owes millions of dollars to its clients and failed to maintain sufficient reserves to cover liabilities. Regulators also noted that the firm neglected to submit critical financial reports, including reconciliations and monthly statements, which further deepened concerns about its financial health. The FID’s order described Fortress’s liquidity position as “wholly inadequate,” warning that more than 250,000 customers—including digital asset retirement accounts and crypto firms—face “immediate risk.”
The cease-and-desist directive prohibits Fortress from accepting deposits, processing withdrawals, or providing custody and money transmission services. In addition, the company must preserve all records while facing possible civil penalties of up to $10,000 per violation. Nevada regulators have also launched an investigation into potential fraud and managerial misconduct.
Fortress was founded in 2021 by Scott Purcell, the same executive behind Prime Trust—a crypto custodian that collapsed in 2023, leaving over $80 million in stranded assets. The current situation bears striking similarities, with regulators labelling Fortress’s operations a “case study in custodial mismanagement.” Despite its rebranding earlier this year, the company reportedly ignored previous regulatory warnings and failed to deliver audited financial statements that might have reassured clients and watchdogs.
The fallout also revives attention on Fortress’s previous connection with Ripple Labs. In 2023, Ripple had considered acquiring the company for $15 million but abandoned the deal after a security breach resulted in equivalent losses. Since then, regulators in states like Connecticut and Maine have been monitoring Fortress closely. Nevada’s latest intervention marks another blow to an already fragile crypto custody sector, where concerns over transparency and solvency continue to mount.
The Fortress shutdown underscores the growing scrutiny facing digital asset custodians as regulators push to protect investors and strengthen oversight in the aftermath of multiple crypto-related collapses. For many, the incident reinforces the urgent need for stricter compliance standards and clearer financial reporting within the industry.
