Payward, the parent company of Kraken, has won a $22 million arbitration award against its former auditor, Mazars USA, which abandoned the audit process just as it was nearing completion. Kraken announced the victory on its official blog while petitioning the Delaware Court of Chancery to confirm the award as final. Kraken Co-CEO Arjun Sethi wrote an open letter accompanying the announcement - not only celebrating the legal win, but also using it as a rallying cry to demand an overhaul of US crypto regulations.
The Auditor That Walked Away Mid-Process
Mazars had audited Kraken’s financial statements for three consecutive years and issued clean opinions twice before abruptly withdrawing from the third audit just days before completion in December 2023. According to Sethi, Mazars even confirmed in writing that they had no disputes with Kraken’s management, found no integrity issues, and detected no indication of fraud. The reason Mazars gave for withdrawing was “regulatory uncertainty” - including an SEC lawsuit filed against Kraken just weeks earlier. Sethi claimed the pressure was no coincidence: Mazars Group had notably halted all proof-of-reserves verification services for the crypto industry starting in December 2022, amid what critics later dubbed Operation Choke Point 2.0 - a term used to describe an informal Biden-era campaign accused of pressuring banks to cut off services to the crypto industry following the collapse of FTX. Sethi pointed to a joint statement by the Federal Reserve, FDIC, and OCC on January 3, 2023, warning banks about crypto risks, as well as at least 25 “pause letters” sent by the FDIC to 24 different banks.
From Home Raids to Eventually Dismissed Lawsuits
Sethi noted that the fallout reached far beyond losing an auditor. He cited a federal raid on the home of Kraken co-founder and former CEO Jesse Powell in March 2023 - connected to a dispute with a nonprofit unrelated to Kraken. That investigation was closed roughly two years later without any charges, and Powell’s devices were returned. Powell had already handed day-to-day operational control to Dave Ripley before Sethi joined as co-CEO. Meanwhile, the SEC lawsuit against Kraken, which Mazars cited as part of its reason to withdraw, was ultimately dismissed with prejudice in March 2025 - without fines or admissions of wrongdoing - as part of a broader wave of dismissals following Gary Gensler’s departure from the SEC and shifting policy directions under the Trump administration.
A Victory Leveraged to Push the Clarity Act
Sethi did not stop at financial compensation. He leveraged the momentum to advocate for the passage of the Clarity Act, a crypto market structure bill designed to divide digital asset oversight between the SEC and the CFTC. In his view, legitimate crypto businesses should not have to fight multi-year legal battles simply to access basic banking and professional services. The bill passed the US Senate Banking Committee in a 15-9 vote in May, following its approval by the House of Representatives last year - but stalled ahead of the July 4 recess and still requires a full Senate vote alongside reconciliation with a companion bill before reaching the president’s desk.
Reported by Decrypt.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
