Kraken wins $22M arbitration; Sethi urges CLARITY Act

Payward, Kraken’s parent company, asked the Delaware Court of Chancery to enter final judgment enforcing a $22 million arbitration award against Mazars USA. The arbitration arose after Mazars withdrew from Kraken’s nearly completed 2022 audit in December 2023.

Mazars had audited Kraken for three years and issued two clean opinions. Payward says Mazars confirmed in writing that it had no management disagreements, no concerns about Kraken’s integrity and no findings of fraud before it withdrew. Mazars told Kraken it was leaving because of legal uncertainty, including an SEC complaint that was later dismissed with prejudice and imposed no penalties or admissions of wrongdoing.

Payward used the court filing to link the withdrawal to broader regulatory pressure on banks, auditors and service providers that work with crypto firms. In a blog post, Co-CEO Arjun Sethi cited Mazars Group’s December 2022 decision to stop proof-of-reserves work for crypto clients and to remove related reports from its website.

Sethi referenced a series of regulatory actions in 2023 that he says contributed to providers stepping back. He pointed to a joint statement from the Federal Reserve, FDIC and OCC warning banks about crypto risks; the SEC’s SAB 121 accounting guidance; the Federal Reserve’s denial of a master account to Custodia; and the shutdowns of payment networks run by Silvergate and Signature banks. Documents obtained through the Freedom of Information Act show the FDIC sent at least 25 letters to 24 banks advising them to pause or avoid expanding crypto activity.

Some of those regulatory positions were later reversed: SAB 121 was rescinded and the banking regulators withdrew their joint statement. Payward’s filing notes congressional investigations that reported regulators relied on vague rules and informal pressure that steered banks away from digital-asset companies.

Sethi described personal and business consequences, saying he was debanked and that companies in his portfolio lost banking relationships despite lawful operations. He referenced Kraken founder Jesse Powell, whose home was searched in 2023 in an unrelated probe that was closed with no charges. In his blog post Sethi wrote, “An audit is not a favor. It is oxygen.”

The CLARITY Act, which Sethi urged Congress to pass, would establish federal market-structure rules for digital assets and clarify which regulators oversee different aspects of the industry. Payward’s request for final judgment in Delaware is the latest legal step intended to recover damages it attributes to Mazars’ withdrawal.