Oxygen Mask Deployed: Kraken Lands $22M Arbitration Win Against Mazars 🪙

Payward, the parent company of crypto exchange Kraken, has secured a $22 million arbitration award against former auditor Mazars USA and asked the Delaware Court of Chancery to enter judgment on the award, according to an open letter from co-CEO Arjun Sethi published Tuesday. 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 Securities and Exchange Commission complaint filed against Kraken weeks earlier. "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. "When an auditor walks away without any findings, the client is left repairing reputational damage it never earned, at a cost of years and millions in legal fees."

Sethi described Mazars' resignation as part of Operation Chokepoint 2.0, a term critics use for a 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 crypto-related risks, and to FDIC "pause letters," at least 25 sent to 24 banks, that advocates say instructed lenders to halt crypto activity. He also cited the SEC's since-rescinded Staff Accounting Bulletin No. 121, the collapse of crypto-focused banking networks Silvergate SEN and Signature's Signet, and Mazars Group's December 2022 halt of proof-of-reserves work for the entire crypto sector. The SEC's suit against Kraken was dismissed with prejudice in March 2025, with no penalties or admission of wrongdoing. Sethi also called on Congress to pass the CLARITY Act, arguing that a comprehensive market structure framework would provide clearer rules for digital asset companies.

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, and said Mazars had confirmed in writing that it had no disagreement with management, no concerns about the company's integrity and had found no fraud. US regulators continue to address crypto-related debanking concerns; in February, the Federal Reserve sought public feedback 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.

Kraken was founded in 2011 and has been widely expected to pursue an initial public offering. In November 2025, the company said it had confidentially submitted a draft Form S-1 registration statement to the US Securities and Exchange Commission, though its public debut may not come until 2027 amid weaker crypto market conditions and ongoing cost-cutting efforts.