Kraken Seeks Final Judgment After $22 Million Award Against Former Auditor
Payward, the parent company of cryptocurrency exchange Kraken, has asked a Delaware District Court to issue a final judgment against its former auditor, Mazars USA, after an arbitrator awarded the company $22 million.
The exchange disclosed the proposal on July 7 through an open letter from CEO Arjun Sethi and a series of posts from CEO Dave Ripley.
The dispute dates back to December 2023, when the Mazars withdrew from Kraken’s 2022 study before it was completed. Mazars has tested Kraken for the past three years and issued two clean opinions, according to the company.
Writing, Sethi said, the auditor confirmed that there was no disagreement with the management, no concerns about the integrity of the company, and no fraud was found.
The Mazars said their resignation was due to legal developments, including a complaint the Securities and Exchange Commission had filed against Kraken a few weeks ago.
That SEC complaint was dismissed with prejudice, with no penalties and no admission of wrongdoing. Kraken said the abandoned audits cost years and millions of dollars in legal fees to defend the new auditors and to convince banks, regulators and partners. The exchange said it has received clean audits in each of the following years.
The letters come as Kraken pursues a full European banking license, reportedly in Lithuania, a move that would allow the company to offer traditional banking services across the European Economic Area and potentially become the first cryptocurrency exchange to receive a full European banking license, according to CoinDesk reporting.
The effort is part of Kraken’s broader regulatory strategy as it expands beyond crypto into mainstream financial services, moving toward milestones that include US Federal Reserve payment access and authorization in the UAE.
Operation Chokepoint 2.0
Sethi put a spin on what critics are calling Operation Chokepoint 2.0, the name of what they describe as a coordinated effort by regulators to cut off legitimate crypto firms from banks and other services. In December 2022, a year before Kraken’s audit, the Mazars Group suspended the crypto industry’s security audit and removed those reports from its website.
The letter revealed a series of actions from 2022 and 2023. On January 3, 2023, the Federal Reserve, the FDIC, and the OCC issued a joint statement warning that crypto business models raise concerns about the safety and soundness of banks.
Documents released after a Freedom of Information Act lawsuit showed that the FDIC sent at least 25 letters to a dozen banks urging them to slow down or stop expanding crypto activity. The SEC’s SAB 121 accounting guidance required public companies holding crypto to record those assets on their balance sheets, a move that made banking uneconomic.
The Federal Reserve has denied a major account to Custodia, a Wyoming bank built for digital assets. And in March 2023, the payment networks managed by Silvergate and Signature were shut down within days of each other.
As the withdrawal period ends, Kraken is looking for rules
Much of that framework has been taken down. The SEC withdrew SAB 121, banking regulators withdrew a joint statement, and a House committee report concluded that regulators are using vague rules and informal pressure to push banks away from legitimate digital asset companies.
Sethi also recounted the experience of Kraken founder Jesse Powell, who started the exchange in 2011. In March 2023, federal agents raided Powell’s home and seized his devices in connection with a dispute involving a non-profit organization unrelated to Kraken.
Two years later, the government closed the investigation, returned the instruments, and brought no charges. Powell offered Ripley the position of CEO, and Sethi joined Ripley in leading the company.
The letter closed with a call for Congress to pass the CLARITY Act, which would establish rules for the market structure of digital assets, separate oversight between the Futures Trading Commission and the SEC and add protections to software developers.
The House passed the bill in July 2025 by a vote of 294 to 134, with 78 Democrats in favor, and the Senate Banking Committee advanced its version in May.
Sethi compared the timeline of the US to the European Union, when the MiCA framework came into force in all member states.
