Kraken has won a $22 million arbitration award against its former auditor Mazars USA, with co-CEO Arjun Sethi linking the dispute to what he described as Operation Chokepoint 2.0.
summary
- Kraken has won a $22 million arbitration award against former auditor Mazars over its withdrawn 2022 audit.
- Co-CEO Arjun Sethi linked the dispute to Operation Chokepoint 2.0 and called for the passage of the CLARITY Act.
- The exchange continues to expand its product portfolio through tokenized share collateral and institutional lending services.
According to a letter posted Tuesday by Kraken co-CEO Arjun Sethi, parent company Payward has asked the Delaware Court of Chancery to rule on the arbitration award following its win against Mazars USA. The dispute centers around the company’s withdrawal from Kraken’s nearly completed 2022 audit, which Sethi said caused financial damage to the exchange.
Mazars ended the engagement despite finding no fraud, raised no concerns about Kraken’s management and reported no disagreements with the company, Sethi wrote. He said the decision disrupted access to banking relationships, licensing processes and other essential business services that depend on completed independent audits.
Describing audits as vital infrastructure for financial companies, Sethi wrote that “audit is not unknown. It is oxygen,” while arguing that legal cryptocurrency companies were denied access to basic financial services during this period.
Sethi links the audit dispute to regulatory pressures
In the letter, Sethi attributed Mazars’ withdrawal to Operation Chokepoint 2.0, a term used by parts of the cryptocurrency industry to describe alleged coordinated pressure on banks, auditors and service providers to distance themselves from digital asset companies.
To support this argument, the letter pointed to several regulatory developments during 2023. including joint guidance issued by US banking regulators, the since-rescinded SEC Staff Accounting Circular 121, the collapse of cryptocurrency-focused banking networks Silvergate SEN and Signature Bank’s Signet payment system.
Sethi also urged Congress to pass the bill The law of claritySaying that a law dedicated to the structure of the cryptocurrency market would provide clearer operating rules for digital asset companies instead of relying on enforcement procedures.
Dave Ripley, Kraken co-CEO, gave his reaction to X, and said the arbitration case represents only part of what happened during that period. Ripley described the $22 million award as compensation for financial harm that he said resulted from a coordinated campaign against the cryptocurrency industry.
Meanwhile, US regulators have continued to review banking oversight linked to digital assets. In February, the Fed requested public comment on a proposal to remove “reputation risk” from banking supervision following its 2025 guidance ordering supervisors to stop pressuring banks to close customer accounts over reputational concerns. Critics of the previous framework argued that the proposal could help end practices associated with Operation Chokepoint 2.0.
Kraken is expanding products while its IPO plans continue
Even as the legal dispute moves through a Delaware court, Kraken has continued to add new enterprise and commercial products.
As previously reported by crypto.news, the exchange recently began allowing eligible users outside the US to use select tokenized stocks and exchange-traded funds as collateral for futures and margin trading on Kraken Pro.
the He releases It covers 10 xStocks assets, including SPYx, QQQx, AAPLx, GOOGLx, TSLAx, NVDAx, HOODx, MSTRx, GLDx, and CRCLx, allowing traders to support leveraged cryptocurrency positions without selling those holdings.
The guarantees initiative comes on the heels of other recent product launches. In May, Payward a partner With Franklin Templeton to provide tokenized money market products for collateral and cash management on Kraken. A month later, Kraken and Maple were launched Institutional crypto lending structure Using remote bankruptcy to obtain loans backed by cryptocurrencies.
Founded in 2011, Kraken is also preparing for a public listing. Company It has been detected In November 2025, it confidentially filed a draft registration statement on Form S-1 with the U.S. Securities and Exchange Commission.
However, reports published in May said the IPO may be delayed until 2027 due to weak cryptocurrency market conditions and ongoing efforts to cut costs.
