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Payward, the parent company of the cryptocurrency exchange Kraken, has filed a lawsuit in a Colorado federal court against its former asset custody partner, Etana Custody.
According to the plaintiff, the defendant's actions may have resulted in the loss of over $25 million in Kraken client funds.
The Nature of the Allegations:
Payward alleges that Etana:
violated contractual obligations;
engaged in deceptive conduct and fraudulent activities;
claimed to maintain “protected accounts” but allegedly used client reserves for risky operations;
commingled client funds with its own assets;
concealed a shortfall in funds through falsified reports.
Separately, the lawsuit alleges:
Etana may have operated a scheme resembling a Ponzi scheme—using new deposits to cover existing liabilities.
The Situation Regarding Fund Withdrawals:
In April of last year, Kraken attempted to withdraw approximately $25 million in reserves; however, Etana delayed the transaction, citing “data reconciliation issues.” Kraken considers these reasons to be unfounded.
Demands:
a minimum of $25 million in damages;
potential treble damages under Colorado’s civil theft statute.
If the allegations are substantiated, this case could become a significant precedent within the realm of crypto custody services and client asset management.
According to the plaintiff, the defendant's actions may have resulted in the loss of over $25 million in Kraken client funds.
The Nature of the Allegations:Payward alleges that Etana:
violated contractual obligations;
engaged in deceptive conduct and fraudulent activities;
claimed to maintain “protected accounts” but allegedly used client reserves for risky operations;
commingled client funds with its own assets;
concealed a shortfall in funds through falsified reports.
Separately, the lawsuit alleges:Etana may have operated a scheme resembling a Ponzi scheme—using new deposits to cover existing liabilities.
The Situation Regarding Fund Withdrawals:In April of last year, Kraken attempted to withdraw approximately $25 million in reserves; however, Etana delayed the transaction, citing “data reconciliation issues.” Kraken considers these reasons to be unfounded.
Demands:a minimum of $25 million in damages;
potential treble damages under Colorado’s civil theft statute.
If the allegations are substantiated, this case could become a significant precedent within the realm of crypto custody services and client asset management.
