An arbitration tribunal awarded Payward, the parent company of the crypto exchange Kraken, USD 22 million in damages. The award concludes its arbitration against Mazars USA. The trigger was the audit firm's withdrawal from a nearly completed audit during the so-called Operation Choke Point 2.0.
Payward operates the crypto exchange Kraken, one of the largest trading platforms for digital assets. Mazars USA, in turn, was one of the established audit firms that audited crypto companies. Banking relationships, licenses and investor confidence depend directly on such an audit. The audit firm had previously reviewed Kraken for three years and issued two unqualified audit opinions. In December 2023, it then withdrew from the nearly finished audit for the 2022 financial year. As justification, Mazars cited the uncertainty from ongoing legal proceedings, including the SEC lawsuit filed in November 2023. In writing, however, the firm confirmed that there had been no disagreements, no integrity concerns and no indications of fraud. The arbitration award now quantifies the damage at USD 22 million. A substantial portion of that stems from Kraken's acquisition of TradeStation Crypto. To make the claim enforceable, Payward petitioned the Delaware Court of Chancery for a legally binding judgment.
Subscribe to our newsletter
The best articles of the week, directly delivered into your mailbox.
Why Mazars abandoned the Kraken audit shortly before completion
For more than three years, Mazars USA reviewed Kraken's financial figures. Twice the firm issued an unqualified audit opinion, the so-called clean opinion. The audit for the 2022 financial year was close to completion when the audit firm withdrew in December 2023. There were no technical objections. Instead, the firm stated in writing that there were neither disagreements with management nor doubts about Kraken's integrity. It found no indications of fraud either.
As the reason, Mazars nevertheless cited the uncertainty from ongoing legal proceedings. Above all, it pointed to the SEC lawsuit filed against Kraken in November 2023. The withdrawal fit into a broader pattern. After all, the Mazars group had already discontinued all proof-of-reserves reviews for the crypto industry back in December 2022. The associated reports disappeared from its website. Moreover, an auditor change without any technical finding hits an exchange at a sensitive point. Without an audited financial statement, banking relationships and licenses come under pressure.
Payward co-CEO Arjun Sethi framed the matter sharply in a blog post and described the audit as existential infrastructure.
"An audit is not a favor. It is oxygen. […] When your own auditor resigns without any finding, you inherit a cloud you did not create yourself, and you pay to clean up a name that was never dirty." - Arjun Sethi, co-CEO Payward
The arbitration award and enforcement in Delaware
The arbitrator awarded Payward a total of USD 22 million in damages. According to reports, around USD 12.5 million of that stemmed from complications in the acquisition of TradeStation Crypto. That process proved more difficult during the phase without a valid audit opinion. For a company of Kraken's size, the amount is financially manageable, yet it carries more weight symbolically. For the first time, an independent arbitrator quantifies the damage from an auditor's withdrawal during the regulatory campaign.
Arbitration resolves disputes outside the ordinary courts, usually confidentially and with narrowly limited legal remedies. Payward therefore filed a petition for a legally binding judgment with the Delaware Court of Chancery on 7 July 2026. Only such a judgment consequently lets Payward enforce the claim, should the opposing side not pay voluntarily.
Operation Choke Point 2.0 and the banking campaign
The term Operation Choke Point 2.0 comes from crypto investor Nic Carter. It refers to an informal campaign by the Biden administration after the FTX collapse. This campaign aimed to deter banks from doing business with crypto firms. The concept draws on the Obama-era initiative of the same name. That initiative originally targeted gun dealers and other unwanted industries. Records document a series of concrete measures. First, the Fed, FDIC and OCC published a joint statement on the risks of crypto banking on 3 January 2023. Later, according to Payward, the FDIC sent at least 25 letters to 24 banks. The letters urged banks to pause or not expand crypto-related activities.
In March 2023, the banking sector's two central crypto payment networks disappeared within a few days. These were Silvergate's SEN and Signature Bank's Signet. Both banks ultimately collapsed in the same month. A court definitively dismissed the SEC lawsuit against Kraken in March 2025. The dismissal came without a fine and without an admission of guilt. It was precisely this lawsuit that Mazars had cited as the reason for its withdrawal. The Trump administration, by contrast, has largely rolled back the measures and is investigating alleged cases of unlawful debanking.
In its account, Payward cites the FBI house search at co-founder Jesse Powell as an example of reputational damage. Independent reporting, however, frames this case differently. The search concerned a cyberstalking allegation surrounding an art non-profit that Powell had co-founded. According to his lawyers, it had no connection to the Kraken business. The authorities ultimately closed the investigation in 2025 without charges and returned the seized devices.
Kraken uses the case for the CLARITY Act
Kraken links the arbitration award offensively to the ongoing legislative process. The CLARITY Act is officially the Digital Asset Market Clarity Act. It aims to clearly delineate the responsibilities of the SEC and the CFTC. The House of Representatives first passed the bill in July 2025 by 294 votes to 134. The Senate Banking Committee later approved it in May 2026 by 15 votes to 9. Since June 2026, it has been on the Senate agenda under Calendar No. 423.
So far, three points of contention have blocked a vote. These involve three areas: ethics and insider-trading provisions, law enforcement concerns about Section 604, and a controversy over stablecoin interest earnings. The Senate returns from its summer recess in mid-July 2026. Observers therefore see this as the last realistic window before the August break. At the same time, a possible IPO is moving closer for Kraken. The company confidentially filed a draft Form S-1 with the SEC in November 2025. Because of the weaker market conditions, observers ultimately expect an IPO in 2027 at the earliest.
