Kraken Wins $22 Million in Arbitrage Against Mazars: New Doubts About Audit Practices in the Crypto Sector

Payward, the parent company of cryptocurrency exchange Kraken, has won a $22 million arbitration award against former accountant Mazars USA. In a letter from co-CEO Arjun Sethi to the Delaware Court of Chancery, a request was made to convert this award into a legally binding ruling. This ruling is noteworthy given the context of the conflict.

Payward states that Mazars withdrew from the nearly completed 2022 audit without any indication of fraud, without doubts regarding management integrity, and without disagreements with the company. This raises questions about the independence and integrity of audit practices within the sector.

Sethi emphasizes that an audit is not merely a favor, but a crucial part of the functioning of a healthy company. He states that independent audits are indispensable for obtaining banking services, licenses, and other business relationships. This remark demonstrates how management risks can translate into broader operational consequences for crypto enterprises.

Moreover, Sethi describes Mazars' withdrawal as part of 'Operation Choke Point 2.0,' a broader campaign pressuring banks, auditors, and other institutions to sever ties with legitimate crypto companies. This claim is reinforced by recent regulatory developments in 2023, including joint guidelines from US banking regulators and the demise of crypto-oriented banking networks such as Silvergate and Signature. For investors and analysts, this underscores the fragility of the ecosystem, which relies on external relationships and the overall regulatory atmosphere.

Sethi also calls on Congress to pass the CLARITY Act. According to him, this bill would create a clear framework for the market structure, giving digital asset companies more clarity regarding regulations and making them less dependent on enforcement by regulatory bodies.

Kraken's co-CEO Dave Ripley stated on the social network X that “this story is worth bringing forward, despite its traumatic impact.” He added that “only a fraction of the stories from that time has been told.” In doing so, he emphasizes not only the unique challenges facing the crypto industry but also the need to bring situations to light transparently and honestly.

Ripley stated that the $22 million arbitration ruling is compensation for the financial damage caused by what it refers to as a coordinated campaign against the crypto industry. This underscores the impact that such external pressure can have on companies within this relatively young sector.

Meanwhile, US regulations continue to focus on concerns surrounding the debanking of crypto customers. In February, the Federal Reserve sought public comment on a proposal to remove 'reputational risk' from banking supervision. This follows the 2025 directive to discourage banks from closing customer accounts for reputational reasons. Critics view this as a potential step toward ending Operation Choke Point 2.0, with potentially positive implications for the accessibility of banking services for the crypto sector.

Kraken, founded in 2011, has had its sights set on an IPO for quite some time. In November 2025, the company reported that it had confidentially filed a draft of the S-1 registration form with the U.S. Securities and Exchange Commission. However, in May, it was reported that the IPO might not take place until 2027, partly due to weaker market conditions in the crypto space and the exchange's ongoing cost-cutting program.

Frequently Asked Questions

What are the possible consequences of the arbitration decision for Kraken?
The $22 million arbitration decision could serve as a precedent for other crypto companies experiencing similar legal disputes. It also underscores the need for transparency and the importance of independent audits in the sector.

How does Operation Choke Point 2.0 affect the crypto industry?
Operation Choke Point 2.0 could lead to a deterioration of access to banking services for legitimate crypto companies. This could hinder the growth and development of the sector, affecting investors and their ability to invest in new projects.

What could the CLARITY Act mean for the future of digital assets?
If the CLARITY Act is passed, it could bring about a significant shift in the regulation of digital assets. It can provide greater clarity and stability, which in turn can increase investor confidence and foster the necessary support for innovation in the sector.