Payward, the parent company of cryptocurrency exchange Kraken, has been awarded $22 million in arbitration against its former auditor, Mazars USA, following the auditor’s abandonment of a nearly completed audit. Payward is seeking to have this award entered as a final judgment by the Delaware Court of Chancery.
According to Arjun Sethi, co-CEO of Kraken, the auditor’s withdrawal occurred during a period Payward claims was associated with reputational harm and financial losses, particularly during what critics describe as ‘Operation Choke Point 2.0’—a campaign to pressure banks into cutting off the crypto industry. Sethi stated that when an auditor walks away without findings, the client is left to repair reputational damage at a significant cost.
Mazars USA had audited Kraken’s financials for three years, delivering two clean opinions. However, the firm quit the third audit in December 2023, days before its completion. Mazars reported in writing that it had no disagreement with management, no concerns about integrity, and found no fraud before withdrawing. The firm cited legal uncertainty, including an SEC complaint filed against Kraken weeks prior, as a reason for its withdrawal.
This dispute unfolded against a backdrop of increased regulatory scrutiny on the crypto industry. In December 2022, Mazars Group had already halted its proof-of-reserves work for the crypto sector. In January 2023, regulators including the Federal Reserve, FDIC, and OCC issued a joint statement warning banks about crypto risks. Around the same time, the FDIC sent approximately 25 ‘pause letters’ to 24 banks, which advocates say instructed lenders to halt or reconsider crypto-related activities.
The SEC had filed a complaint against Kraken weeks before Mazars abandoned its audit. This suit was later dismissed with prejudice in March 2025, with no penalties or admission of wrongdoing by Kraken, noted as part of a broader shift in regulatory approach.
In a related development, Kraken co-founder and former CEO Jesse Powell’s home was raided by federal agents in March 2023. The investigation was reportedly closed about two years later with no charges filed.
Sethi has pointed to these events as a reason to support legislative efforts like the Clarity Act, a bill aimed at dividing oversight of digital assets between the SEC and the CFTC. The Clarity Act cleared the Senate Banking Committee in May with a 15-9 vote, after passing the House in the previous year, but has faced hurdles and requires further votes to become law.
Payward’s claim in arbitration centered on the reputational and financial damage was associated with by Mazars’ abrupt departure from the audit. Sethi argued that proving a lawful crypto business deserves ordinary banking and professional services should not require winning a legal fight.
Uncertainties remain regarding the exact date of the arbitration award announcement and the specific years the Clarity Act passed the House and cleared the Senate Banking Committee. The full extent of legal uncertainty cited by Mazars and whether the firm acted independently or under pressure are also points of ambiguity. The precise reasons for the SEC’s initial complaint against Kraken and the full impact of ‘Operation Choke Point 2.0’ on the broader crypto industry are also not fully detailed.
Why This Matters
The materials describe a narrow update: Payward, the parent company of Kraken, received a $22 million arbitration award from its former auditor, Mazars USA. The exact date of the Tuesday announcement.
Broader Context
Source materials place the factual news in this context: Operation Choke Point 2.0 is a widely used term for what critics describe as the Biden administration’s unofficial campaign to pressure banks into cutting off the crypto industry after the collapse of FTX.
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