Kraken’s Payward Files Lawsuit Against Crypto Custodian Etana, Alleging $25M Ponzi Plot

Payward, the father or mother firm of cryptocurrency alternate Kraken, has filed a lawsuit towards its very personal crypto custodian, Etana Custody, and its CEO, Brandon Rusell, alleging that Etana misappropriated greater than $25 million in shopper funds and operated what Payward characterizes as a “Ponzi-like” scheme. 

Etana Misused Kraken Reserves

The dispute traces again to a partnership fashioned by means of Payward. In line with the timeline offered, on July 31, 2018, Kraken—by way of Payward—partnered with Etana Custody to assist fiat on-ramp and off-ramp providers. 

Payward’s submitting then factors to a significant breakdown in April 2025, when Kraken tried to withdraw $25 million, and Etana was allegedly unable to fulfill the request.

The lawsuit contends that Etana allegedly commingled Kraken buyer reserves with its personal operational funds, utilizing cash for working bills, and a foreign-exchange hedging technique the place, Payward alleges, income had been saved whereas buyer funds had been in danger. 

Kraken’s father or mother firm additional claims that Etana issued false account statements and dashboard balances displaying funds as totally secured and obtainable, though inside information allegedly indicated shortages.

When these shortages allegedly emerged, Payward says Etana lined them by drawing on new buyer deposits to fulfill older obligations—an association that, if true, would proceed solely so long as new cash saved arriving. 

Kraken’s litigation head, Matt Turetzky, addressed the allegations in a put up on X (previously Twitter). In that message, he stated the state of affairs was “wild,” describing claims that Etana spent the alternate’s cash on working bills and dangerous investments, then allegedly despatched deceptive statements for years. 

Turetzky additionally asserted that Etana’s personal authorized crew advisable a “immediate, full, and clear disclosure” to Kraken, however that, in keeping with his account, as an alternative of receiving restitution, Kraken was met with excuses. 

He emphasised Kraken’s scale—stating it serves “hundreds of thousands of customers” and processes “lots of of billions of {dollars} in quarterly transaction quantity”—and stated Kraken would “discover you,” “sue you,” and “not cease till justice has been served.”

Payward Completes Bitnomial Acquisition

Whereas the lawsuit unfolds, Payward additionally introduced a significant company step accomplished throughout Monday’s developments: it has completed its acquisition of Bitnomial, a crypto-native derivatives platform licensed by the US Commodity Futures Buying and selling Fee (CFTC). 

Payward says this deal provides it what it calls the complete US derivatives infrastructure stack, comprising a Futures Fee Service provider (FCM), a Designated Contract Market (DCM), and a Derivatives Clearing Group (DCO).

In its launch, Payward described this regulatory setup because the platform that allows it to deliver CFTC-regulated spot margin, perpetuals, and choices to eligible US purchasers on Kraken and NinjaTrader. 

Arjun Sethi, the cryptocurrency alternate’s Co-CEO, stated the closing of the transaction offers a regulated US derivatives basis “purpose-built for digital belongings, not tailored to them.” 

He added that the stack “is what makes the subsequent set of merchandise potential,” with Payward beginning with spot margin on Kraken and planning for perpetuals and choices to comply with—all beneath CFTC regulation inside america.

Featured picture from OpenArt, chart from TradingView.com

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