Regulators in Nevada issued a cease-and-desist order dated Oct. 22 against the custodian, saying that Fortress’ liquidity position is “wholly inadequate to meet customer obligations.”

The state’s Financial Institutions Division found that Fortress owed millions to clients, according to the order. The firm admitted it couldn’t meet customer withdrawals and failed to produce basic financial documentation, including account reconciliations and recent monthly statements.

“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,” current CEO Anthony Botticella said in a signed statement included in the filing. “These pre-existing issues materially affected the Trust’s ability to continue as an ongoing viable entity.” Botticella became CEO in December 2023, the declaration said.

According to the order, Fortress owes clients more than $8 million in fiat currency and $4 million in crypto at current prices. However, the custodian has less than $200,000 in cash and only around $1 million in crypto on hand, the filing showed.

Fortress was unable to provide financial statements for July, August or September, the Nevada regulator said.

In 2023, Ripple backed out of the deal to buy Fortress after Fortune published a story saying that Fortress lost millions in a hack. Then-CEO Scott Purcell told Bloomberg a third-party service was breached, but his company hadn’t been directly hacked.