Kraken Wins $22 Million Arbitration Against Mazars
Kraken’s parent company, Payward, has won a $22 million arbitration award against its former auditor, Mazars USA, after the accounting firm withdrew from a nearly completed audit in 2022. The company has asked the Delaware Court of Chancery to confirm the arbitration award and enter it as a final judgment.
According to Payward, Mazars ended the audit without identifying any fraud, financial misconduct, or disagreement with the company’s management. The company argues that the sudden withdrawal caused significant reputational damage and disrupted its business during a challenging period for the cryptocurrency industry.
Why Mazars Withdrew From Kraken's Audit
The dispute dates back to what is commonly known as Operation Choke Point 2.0, a term used by many in the crypto industry to describe alleged regulatory pressure on banks and financial institutions to reduce their relationships with cryptocurrency companies following the collapse of FTX.
Payward believes this uncertain regulatory environment influenced Mazars’ decision to abandon its nearly completed audit. Despite withdrawing, the auditor reportedly confirmed that it had no concerns about Kraken’s management, financial reporting, or business integrity.
Kraken Says the Withdrawal Hurt Its Business
Payward co CEO Arjun Sethi said an independent audit is essential for maintaining banking relationships, securing regulatory approvals, and building trust with customers and business partners. He argued that losing an auditor without any findings of wrongdoing created unnecessary uncertainty around the company.
According to Sethi, Kraken spent years protecting its reputation and millions of dollars on legal proceedings after Mazars ended the engagement. He emphasized that the company was forced to defend itself even though the auditor found no evidence of fraud or misconduct before leaving.
Regulatory Landscape Has Changed Since 2022
The cryptocurrency industry has seen significant regulatory changes since the audit dispute began. Several policies associated with Operation Choke Point 2.0 have been rolled back, while U.S. authorities have started reviewing claims of unfair debanking involving crypto businesses.
At the same time, the U.S. Securities and Exchange Commission (SEC) dropped or resolved several enforcement actions against cryptocurrency companies following changes in leadership, including its case involving Kraken. Meanwhile, Mazars had already begun reducing its involvement in the digital asset sector by ending its crypto proof of reserves work.
Kraken Pushes for Clearer Crypto Rules
Following the arbitration victory, Sethi urged U.S. lawmakers to approve the CLARITY Act, legislation that would establish clearer regulatory responsibilities between the SEC and the Commodity Futures Trading Commission (CFTC).
He said cryptocurrency companies should not have to fight lengthy legal battles simply to access banking services, audits, and other essential financial infrastructure. According to Payward, clear and consistent regulations would strengthen investor confidence, encourage innovation, and support the long term growth of the digital asset industry.
What This Means for the Crypto Industry
Kraken’s legal victory is being viewed as an important moment for the cryptocurrency sector. The case highlights the challenges many digital asset companies faced during a period of heightened regulatory scrutiny and limited access to critical financial services.
As lawmakers continue debating new crypto legislation, the outcome of this dispute may strengthen calls for clearer regulations and greater transparency across the industry. For many businesses, stable regulatory frameworks remain essential for attracting investment, maintaining trusted partnerships, and supporting future growth.
