Payward, the parent company of the cryptocurrency exchange Kraken, has asked the Delaware Court of Chancery to enter a final judgment against its former auditor, Mazars USA, after an arbitrator awarded the firm $22 million.
The exchange disclosed the request on July 7 through an open letter from co-CEO Arjun Sethi and a series of posts from CEO Dave Ripley.
The dispute traces to December 2023, when Mazars withdrew from Kraken’s 2022 audit days before its completion. Mazars had audited Kraken for three prior years and issued two clean opinions, according to the company.
In writing, Sethi said, the auditor confirmed it had no disagreement with management, no concerns about the firm’s integrity, and no findings of fraud.
Mazars attributed its resignation to legal developments, among them a complaint the Securities and Exchange Commission had filed against Kraken weeks before.
That SEC complaint was dismissed with prejudice, with no penalties and no admission of wrongdoing. Kraken said the abandoned audit cost it years and millions of dollars in legal fees to secure new auditors and reassure banks, regulators, and counterparties. The exchange said it has received a clean audit in each year that followed.
The letters come as Kraken pursues a full European banking license, reportedly through Lithuania, a move that would allow the company to offer traditional banking services across the European Economic Area and potentially become the first cryptocurrency exchange to secure a full European bank license, according to CoinDesk reporting.
The effort is part of Kraken’s broader regulatory strategy as it expands beyond crypto into mainstream financial services, building on milestones including U.S. Federal Reserve payment access and authorization in the UAE.
Operation Chokepoint 2.0
Sethi placed the episode within what critics call Operation Chokepoint 2.0, a term for what they describe as a coordinated effort by regulators to cut lawful crypto firms off from banking and other services. In December 2022, a year before quitting the Kraken audit, Mazars Group halted proof-of-reserves work for the crypto sector and removed those reports from its website.
The letter cited a chain of actions from 2022 and 2023. On January 3, 2023, the Federal Reserve, FDIC, and OCC issued a joint statement warning that crypto business models raised safety and soundness concerns for banks.
Documents released after a Freedom of Information Act lawsuit showed the FDIC sent at least 25 letters to two dozen banks urging them to pause or refrain from expanding crypto activity. The SEC’s SAB 121 accounting guidance required public companies holding crypto to record those assets on their balance sheets, a step that made custody uneconomical for banks.
The Federal Reserve denied a master account to Custodia, a Wyoming bank built for digital assets. And in March 2023, the payment networks run by Silvergate and Signature shut down within days of each other.
As the debanking era ends, Kraken demands rules
Much of that framework has come undone. The SEC rescinded SAB 121, the banking regulators withdrew the joint statement, and a House committee report concluded that regulators used vague rules and informal pressure to push banks away from lawful digital asset firms.
Sethi also recounted the experience of Kraken founder Jesse Powell, who started the exchange in 2011. In March 2023, federal agents raided Powell’s home and seized his devices in connection with a dispute involving a nonprofit unrelated to Kraken.
After two years, the government closed the investigation, returned the devices, and brought no charges. Powell handed the chief executive role to Ripley, and Sethi joined Ripley in leading the company.
The letter closed with a call for Congress to pass the CLARITY Act, which would establish market-structure rules for digital assets, dividing oversight between the Commodity Futures Trading Commission and the SEC and adding protections for software developers.
The House passed the bill in July 2025 by a vote of 294 to 134, with 78 Democrats in support, and the Senate Banking Committee advanced its version in May.
Sethi contrasted the U.S. timeline with the European Union, where the MiCA framework took effect across member states.
Micah first discovered Bitcoin in 2018 but remained a skeptic on the sidelines for too long. Since 2021, he has covered crypto and business and now works as a news reporter for Bitcoin Magazine, based in North Carolina.