Kraken’s parent company, Payward, has secured a $22 million arbitration award against accounting firm Mazars USA after the auditor abandoned a nearly finished audit in December 2023, the crypto exchange announced in a blog post on Tuesday.
Co-CEO Arjun Sethi revealed the outcome in an open letter that also called on Congress to pass the Clarity Act. Payward is now seeking to have the Delaware Court of Chancery enter final judgment on the award.
The Aborted Audit
According to Sethi, Mazars had audited Kraken’s financials for three consecutive years and delivered two clean opinions before walking away from the third engagement days before it was due to be completed. The firm confirmed in writing that it had found no fraud, had no disagreement with management, and had no concerns about the company’s integrity.
Sethi said Mazars cited legal uncertainty when it quit, pointing specifically to an SEC complaint filed against Kraken weeks earlier. He alleged the firm had been pressured to exit an industry that had become politically costly to serve, noting that Mazars Group had halted its proof-of-reserves work for the entire crypto sector as far back as December 2022. Mazars has not publicly responded to Kraken’s account, and the claim that it was pressured to withdraw is Sethi’s characterisation rather than an established finding.
‘An audit is not a favor. It is oxygen,’ Sethi wrote, arguing that banking relationships, licenses, and regulatory standing all depend on completed audits. When an auditor walks away without findings, he said, the client bears years of reputational repair and millions in legal costs for something it never earned.
Operation Choke Point 2.0
Sethi framed the Mazars episode within what critics call Operation Choke Point 2.0, the term used to describe what they allege was the Biden administration’s informal campaign to pressure banks into cutting off the crypto industry following the collapse of FTX. Supporters of the term compare it to an Obama-era program that leaned on banks to drop sectors such as payday lenders and firearms dealers.
He pointed to a January 3, 2023 joint statement from the Federal Reserve, FDIC, and OCC warning banks about crypto risks, as well as at least 25 so-called pause letters the FDIC sent to 24 banks that advocates say directed lenders to halt or hold off on crypto activity. Around the same period, then-SEC chair Gary Gensler’s agency was suing or investigating dozens of crypto firms, including Kraken.
The SEC Case and Its Aftermath
The SEC’s suit against Kraken was dismissed with prejudice in March 2025 with no penalties and no admission of wrongdoing, following Gary Gensler’s departure and the Trump administration’s change in direction on crypto enforcement. Operation Choke Point 2.0 has largely been wound down, with earlier regulatory guidance rolled back.
Sethi also noted that Kraken co-founder and former CEO Jesse Powell had his home raided by federal agents in March 2023 over a dispute involving a nonprofit unrelated to the exchange. That investigation was closed roughly two years later with no charges filed and Powell’s devices returned. Powell has since handed day-to-day control to Dave Ripley, with Sethi joining later as co-CEO.
A Push for the Clarity Act
Sethi used the arbitration announcement to press for passage of the Clarity Act, the crypto market structure bill that would split digital asset oversight between the SEC and the CFTC. He argued that no lawful crypto business should need to win a legal battle simply to access routine banking and accounting services.
The Clarity Act cleared the Senate Banking Committee in a 15-9 vote in May, having already passed the House the prior year. The bill stalled before the July 4 recess and still requires a full Senate vote and reconciliation with a companion measure before it can reach the president’s desk.
