The Kraken parent company Payward disclosed that it had obtained an arbitration award of $22 million in respect of the withdrawal of the 2022 audit by the former auditor, Mazars USA, and had requested the Delaware Court to convert the arbitration results into a court judgement. At the time of the dispute, the United States encryption industry was under increased pressure from banks and services.

Access to court proceedings for audit disputes

According to a letter issued on Tuesday by Co-Chair Kraken CEO Arjun Sethi, Mazars withdrew from cooperation when the audit was nearing completion in 2022. Sethi states that the other party did not detect fraud and did not challenge the management of the company, but that this decision resulted in financial losses to Kraken.

He stated that independent auditing was not an option for financial firms. The interruption of the audit would have a direct impact on bank cooperation, licence applications and other business arrangements that relied on complete audit reports.

Kraken pointed the incident at outside pressure.

In his letter, Sethi linked the incident to the so-called “Operation Chokepoint 2.0”. This is often used by some of the encryption industry to describe the distance that banks, auditing institutions and other service providers, under regulatory pressure, are taking from digital asset companies.

The background mentioned in the letter included the 2023 United States Joint Guidance for Banking Regulators, the subsequently withdrawn USSMIS Accounting Bulletin SAB 121 and the closure of encrypted banking networks such as Silvergate SEN and Signature Signet.

Another co-chair, CEO Dave Ripley, also stated on X that the $22 million compensation was only part of the damage to the industry at the time. In his view, this compensation corresponds to the actual financial damage that Kraken suffered during that period.

Continue to expand institutions and traded products

As the legal process progressed, Kraken was expanding its product line. The Exchange has recently allowed some eligible users outside the United States to use some monetized shares and ETF on Kraken Pro as collateral for futures and deposit transactions.

  • SPYx, QQQQx, AAPLx, GOOGLx
  • TSLAx, NVDAx, HODx, MSTRx
  • GLDx, CRCLx

Kraken also introduced a monetized currency market product with Franklin Templeton for collateral and cash management, and then an agency-oriented encrypted lending structure with Maple.

The listing is still going on.

The company disclosed that Kraken had submitted a draft S-1 listing in secret to the United States SEC as early as November 2025. However, in May, reports indicated that IPO could be delayed to 2027 because of the environmental weakness and cost control of the encrypted market.

Additional information:In February this year, the United States Federal Reserve Board sought public opinion on the elimination of the “honour risk” indicator in bank supervision. Critics believe that this adjustment may reduce the number of cases in which banks are cut off from digital asset clients because of reputational concerns.