TL;DR:
- Kraken’s parent company, Payward Inc., is suing former auditor Mazars USA for $22 million after a confidential arbitration award.
- Redacted arbitration decisions said Mazars’ late-2023 withdrawal created a licensing crisis and tied $12.5 million of damages to Kraken’s TradeStation Crypto acquisition as state approvals became harder to secure nationwide.
- The dispute followed SEC and grand-jury subpoenas, unfinished 2022 audit work and the SEC’s 2023 lawsuit, later withdrawn in March 2025.
Kraken’s parent company, Payward Inc., is suing former auditor Mazars USA for $22 million after a confidential arbitration found the audit firm’s late-2023 exit caused measurable damage. The dispute traces back to the period after US regulators sued Kraken in 2023, when Mazars halted work days before completing the audit of Kraken’s 2022 financials. Court records say the withdrawal created a licensing crisis tied to state money transmitter approvals. For a major crypto exchange, the auditor’s exit became a regulatory bottleneck, not just an accounting breakdown for executives already navigating a hostile enforcement cycle.
Audit withdrawal turns into licensing fallout
The arbitration award, issued by a retired judge, is now at the center of Kraken’s lawsuit seeking payment. According to redacted decisions filed in court, the arbitrator awarded Kraken $22 million and tied part of the damages to its purchase of TradeStation Crypto, an investment platform. Industry reporting in 2024 said Kraken acquired that unit partly for its regulatory licenses. The arbitration records put $12.5 million of the award in connection with that acquisition. The damages theory links audit disruption to strategic acquisition costs, making the case unusually operational rather than abstract.
The timing around Mazars’ withdrawal is what gives the dispute its sharper edge. By late 2023, Kraken was under investigation by the US Securities and Exchange Commission and facing pressure from state regulators over delayed audits needed for licenses. Mazars had also received subpoenas from a grand jury and the SEC for Kraken files, according to court filings. The SEC complaint reportedly cited comments or findings that appeared to come from Mazars’ audit workpapers. The audit relationship was caught inside overlapping legal pressure, where regulator scrutiny, licensing deadlines and unfinished financial statements collided at once.
Kraken’s leadership framed the exit as reputationally damaging. Arjun Sethi, co-CEO of Payward, said an auditor quitting without findings left the company under a cloud and forced it to spend years and millions in legal fees clearing its name. The SEC later withdrew its lawsuit against Kraken in March 2025. Mazars, now part of Forvis Mazars, did not immediately respond to a request for comment. The lawsuit now tests how much accountability follows auditor withdrawal, especially when crypto firms depend on completed audits to satisfy regulators and preserve transaction timelines during global expansion.
