Kraken’s parent company Payward has won a $22 million arbitration award against former auditor Mazars USA after the accounting firm withdrew from nearly completed audit work in December 2023, triggering what court records describe as a licensing crisis for the cryptocurrency exchange.
Payward asked the Delaware Court of Chancery to enter final judgment against Mazars USA following the arbitration victory, according to a public statement from Kraken. The exchange said Mazars had previously delivered two clean audit opinions over three years before abruptly pulling out days before the 2022 audit was set to be completed. For related coverage, see Aave Founder Denies Kraken Stake Deal Report.
Kraken stated that Mazars confirmed in writing at the time of its withdrawal that it had no disagreement with management, no concerns about integrity, and had found no fraud. The exchange framed the departure as groundless, leaving it to deal with consequences it did not create.
How Mazars’ withdrawal created a licensing crisis
The financial damage went beyond reputational harm. Business Insider reported, citing court records and redacted arbitration decisions, that Mazars’ exit created a licensing crisis for Kraken. Without a completed audit, the exchange faced obstacles in obtaining state money transmitter licenses it needed to operate across the United States.
Of the total arbitration award, $12.5 million was tied to Kraken’s acquisition of TradeStation Crypto. The incomplete audit reportedly complicated the regulatory approvals required for that deal, adding direct financial costs to what began as an auditor relationship breakdown.
For a crypto exchange already navigating regulatory expansion efforts, the loss of auditor continuity struck at a critical operational dependency. Exchanges rely on completed audits not just for investor confidence but for the licensing infrastructure that allows them to serve customers in regulated jurisdictions.
Regulatory backdrop and the SEC factor
The timing of Mazars’ December 2023 withdrawal coincided with a period of intense regulatory scrutiny of the crypto industry. Kraken co-CEO Arjun Sethi has characterized the withdrawal as part of a broader campaign of institutional pressure against lawful crypto companies, though this interpretation has not been independently verified.
“When your auditor quits with no findings against you, you inherit a cloud you did nothing to create, and you pay to clear a name that was never dirty.”
Arjun Sethi, Kraken co-CEO
Business Insider also reported that the SEC withdrew its lawsuit against Kraken in March 2025. Kraken has said the complaint was ultimately dismissed with prejudice and produced no penalties or operational changes, further supporting its argument that the regulatory cloud surrounding the exchange was unwarranted.
What this signals for crypto audit relationships
The Kraken-Mazars dispute highlights a structural vulnerability in the crypto industry: the small number of accounting firms willing to audit digital asset companies. When one of those firms exits an engagement, the downstream effects can cascade through licensing, M&A timelines, and regulatory standing.
This case marks a rare instance of a crypto company successfully pursuing legal accountability against a departing auditor. Most disputes over audit withdrawals are resolved quietly or absorbed as a cost of operating in an industry where auditor willingness remains scarce.
The arbitration outcome arrives as the broader crypto market trades under pressure. Bitcoin sat near $62,216 with the Fear & Greed Index at 20, reflecting extreme fear among market participants.
For Kraken, which has been expanding its product offerings and building out collateral options for traders, the Delaware Court proceedings represent the next step in enforcing the award. The exchange now awaits a final judgment that would make the $22 million arbitration decision legally binding.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
