$25M 'Ponzi-Like' Scheme: Kraken's Parent Sues Crypto Custodian Etana
Summary
Kraken's parent company, Payward, has filed a lawsuit against crypto custodian Etana and its CEO, alleging the misappropriation of over $25 million in client funds through a "Ponzi-like" scheme. The complaint states that Etana failed to fulfill a $25 million withdrawal request from Kraken in April 2025, subsequently revealing that it allegedly commingled client funds, used them for operational expenses and investments, and relied on new deposits to cover existing shortfalls. This material legal and financial risk event could significantly impact Kraken's financial position, reputation, and customer trust, especially given the serious allegations against a long-term fiat on-ramp partner. The lawsuit follows Etana's court-supervised liquidation in November 2025. Investors should monitor the lawsuit's progression, potential fund recovery, and any broader regulatory implications for Kraken's custodial practices.
This news item was assessed with negative market sentiment and an importance score of 9 out of 10. Source: Finance Magnates.