Kraken Wins $22 Million Arbitration as Arjun Sethi Calls for Clear Crypto Rules

Kraken Asks Delaware Court to Enforce $22 Million Award Against Mazars USA

Payward, the parent company of Kraken, has asked the Delaware Court of Chancery to enter final judgment against Mazars USA after an arbitrator awarded the crypto exchange operator $22 million.

The dispute stems from Mazars’ decision to withdraw from Kraken’s nearly completed 2022 audit in December 2023. According to Payward Co-CEO Arjun Sethi, Mazars had audited Kraken for three years, issued two clean opinions, and was days away from completing a third.

Sethi said the auditor confirmed in writing that it did not disagree with Kraken’s management, had no concerns about the company’s integrity, and had no findings of fraud.

“An audit is not a favor. It is oxygen,” Sethi wrote in his blogpost. “Banking relationships, licenses, counterparties, and regulators all depend on it.”

Mazars cited legal uncertainty, including a recent Securities and Exchange Commission (SEC) complaint against Kraken. That case was later dismissed with prejudice, with no penalties, no admission of wrongdoing and no required changes to Kraken’s business.

Kraken Links Mazars Exit to Regulatory Pressure

Sethi argued that Mazars’ departure was not an isolated commercial decision but part of what critics have called Operation Chokepoint 2.0, a period of informal pressure on banks, auditors and service providers working with lawful crypto firms.

He pointed to Mazars Group’s December 2022 decision to halt proof-of-reserves work for the crypto sector and remove related reports from its website. In his view, the firm was not walking away from weak clients, but from an industry that had become politically costly to serve.

“I will say what I believe plainly: Mazars was pressured,” Sethi wrote.

His post also cited actions by U.S. regulators in 2023, including a joint statement from the Federal Reserve, FDIC and OCC warning banks about crypto-related risks. Documents later released through a Freedom of Information Act lawsuit showed the FDIC sent at least 25 letters to 24 banks urging them to pause or avoid expanding crypto activity.

Sethi also referenced the SEC’s SAB 121 accounting guidance, the Federal Reserve’s denial of Custodia’s master account and the shutdown of Silvergate’s SEN and Signature’s Signet settlement networks.

Sethi Calls for CLARITY Act

Much of that regulatory posture has since been reversed. SAB 121 was rescinded, the banking regulators withdrew their joint statement, and congressional investigations found that regulators used vague rules and informal pressure to steer banks away from digital asset firms.

Sethi said the damage was not limited to companies. He described being personally debanked and said portfolio companies at Tribe Capital lost banking relationships despite doing nothing wrong.

He also cited Kraken founder Jesse Powell, whose home was raided in 2023 over a nonprofit-related dispute unrelated to Kraken or crypto. The investigation was later closed with no charges.

The blogpost ends with a call for Congress to pass the CLARITY Act, which would create federal market-structure rules for digital assets and clarify oversight between regulators.

“We won this fight,” Sethi wrote. “Now, our congressional leaders from both sides of the aisle need to come together to finish the bigger one. Pass the CLARITY Act.”