Kraken parent company wins $22 million arbitration against auditor Mazars
Odaily Odaily Planet Daily News Kraken's parent company Payward has won an arbitration against its former auditor, Mazars USA. The arbitrator ruled that Mazars must pay Payward $22 million. Payward is now asking the Delaware Court of Chancery to confirm the arbitration award and enter a final judgment.
The dispute originated during the peak of "Operation Choke Point 2.0" in 2022. Payward stated that Mazars abruptly withdrew from a nearly completed audit of Kraken without finding any issues with the company, but the move caused reputational damage to Kraken and forced it to spend years and substantial legal fees clarifying its position.
Payward co-CEO Arjun Sethi stated that audits are not a "favor" for crypto companies but critical infrastructure for maintaining banking relationships, licenses, counterparty trust, and regulatory confidence. When an auditor withdraws without negative findings, it leaves the company facing unwarranted suspicion.
"Operation Choke Point 2.0" is the crypto industry's term for the regulatory pressure during the Biden administration, referring to the period after the FTX collapse when U.S. regulators informally pressured banks to restrict services to crypto companies. Sethi said the FDIC sent at least 25 letters to 24 banks, asking them to pause or avoid expanding crypto-related services. This ruling is also seen as a legal counterstrike by the crypto industry against related regulatory pressures.
