Fortress Trust Declared Insolvent Amid Asset Safeguarding Failures

Fortress Trust, founded by Scott Purcell, was declared insolvent by Nevada regulators on October 22, 2025, following failed client asset safeguarding. The Nevada Financial Institutions Division stated, “Fortress Trust was on the verge of insolvency, failed to safeguard assets, and could not fulfill customer withdrawal requests, with outstanding obligations far exceeding actual assets.” source

Fortress Trust’s insolvency raises concerns about asset mismanagement, impacting its ability to safeguard client funds and meet withdrawal requests, echoing past Prime Trust incidents.

Fortress Trust Collapse Follows Cease-and-Desist Order

The collapse of Fortress Trust follows the cease-and-desist order issued by Nevada regulators. Insolvency, with liabilities exceeding its assets, marks a significant rupture in client asset protection. Scott Purcell’s history with Prime Trust raises questions about repeated governance issues under his leadership.

Anthony Botticella, now CEO, expressed that pre-existing financial difficulties were already present before he assumed his role. The broader crypto custodial trust sector faces scrutiny, especially with Ripple withdrawing acquisition intentions after due diligence exposed deeper issues.

Market Reacts to Liquidity Concerns Amid Insolvency

The market has reacted with concerns over client fund accessibility and a potential loss of trust in custodial services. Service disruptions are expected due to liquidity challenges posed by the insolvency.

Financial implications are profound, with substantial shortfalls in customer fiat and crypto obligations. Anthony Botticella, CEO of Fortress Trust, noted, “I learned after assuming the position of Chief Executive Officer that the Trust was experiencing severe financial difficulties and challenges related to events that occurred prior to assuming my role. These pre-existing issues materially affected the Trust’s ability to continue as an ongoing viable entity.”

This situation highlights the vulnerabilities of crypto custodial models, prompting regulatory and investor attention on proper asset management practices.

Echoes of 2023 Prime Trust Collapse: A Pattern Emerges

This incident mirrors the 2023 Prime Trust collapse, also associated with Purcell, affecting custody for BTC, ETH, and altcoins. Historical mismanagement in both cases led to substantial asset losses.

Potential outcomes include increased regulatory oversight and calls for enhanced transparency in custodial practices. Trust in custodial models remains at risk, with prior events demonstrating the serious implications of insufficient asset safeguards.