Kraken banked $22M from its ex-auditor — and called the whole thing "oxygen" 🫁

Payward, the parent company of crypto exchange Kraken, has won a $22 million arbitration award against former auditor Mazars USA and is asking the Delaware Court of Chancery to enter judgment on the award, according to an open letter published Tuesday by co-CEO Arjun Sethi. Payward said Mazars withdrew from the exchange's nearly completed 2022 audit in December 2023 despite finding no fraud, raising no concerns about management's integrity and reporting no disagreements with the company. Mazars had audited Kraken's financials for three years and delivered two clean opinions before quitting the third audit days before completion, citing legal uncertainty including a complaint the SEC had filed against Kraken weeks earlier. The SEC's suit against Kraken was later dismissed with prejudice in March 2025, with no penalties or admission of wrongdoing. "An audit is not a favor. It is oxygen," Sethi wrote, arguing that independent audits are essential for obtaining banking services, licenses and other business relationships.

Sethi characterized Mazars' resignation as part of what he called Operation Chokepoint 2.0, a broader campaign that pressured banks, auditors and other institutions to cut ties with lawful crypto companies. He pointed to a January 3, 2023 joint statement from the Federal Reserve, FDIC and OCC warning banks about the risks of crypto, the SEC's since-rescinded Staff Accounting Bulletin No. 121, and the collapse of crypto-focused banking networks Silvergate SEN and Signature's Signet. He also cited FDIC "pause letters" — at least 25 sent to 24 banks — that advocates say instructed lenders to halt or hold off on crypto activity. Sethi said Mazars Group had halted its proof-of-reserves work for the entire crypto sector in December 2022 and that the firm had been pressured to abandon an industry that had become politically costly to serve. The Federal Reserve sought public feedback in February on a proposal to formally remove "reputation risk" from bank supervision, following its 2025 directive to stop pressuring banks to close customer accounts over reputational concerns, a move critics said could help wind down Operation Chokepoint 2.0.

Kraken co-CEO Dave Ripley said on X Tuesday that "this story is worth surfacing despite its PTSD-inducing nature," adding that "only a fraction of the stories from that era have ever been told." Ripley described the $22 million arbitration award as compensation for financial harm caused by what he called a coordinated campaign against the crypto industry. Sethi used the letter to call on Congress to pass the CLARITY Act, arguing that a comprehensive market structure framework would provide clearer rules for digital asset companies and reduce reliance on regulatory enforcement. Kraken was founded in 2011 and in November 2025 said it had confidentially submitted a draft Form S-1 registration statement to the US Securities and Exchange Commission, though the company was reported in May to be weighing a public debut that may not come until 2027 amid weaker crypto market conditions and ongoing cost-cutting efforts.