Kraken Sues Etana Custody Over $25M Ponzi-Like Scheme, Bitnomial Deal Closes

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Kraken’s Payward Files Lawsuit Against Crypto Custodian Etana, Alleging $25M Ponzi Plot

Kraken’s parent company, Payward, is suing its crypto storage provider, Etana Custody, and its CEO, Brandon Russell. Payward claims Etana stole over $25 million from customers and ran a fraudulent operation similar to a Ponzi scheme.

Etana Misused Kraken Reserves

The disagreement stems from a partnership that began with Payward. Records show that on July 31, 2018, Kraken used Payward to partner with Etana Custody, enabling customers to easily deposit and withdraw traditional currencies.

The filing also details a significant issue in April 2025: when Kraken tried to withdraw $25 million, Etana reportedly couldn’t fulfill the request.

The lawsuit claims Etana improperly mixed customer funds from Kraken with its own money. Specifically, Etana allegedly used these funds to cover business costs and for a foreign exchange strategy where any profits were retained by Etana, while customer money faced potential losses.

As a crypto investor, I’m really concerned about what’s happening with Etana. Kraken’s parent company is saying Etana was sending out misleading statements – showing my funds (and others’) as fully secured and available when, behind the scenes, they apparently knew there weren’t enough funds to cover everything. It’s like they were pretending everything was okay when it wasn’t, which is a huge red flag.

Payward claims that when shortages happened, Etana would use money from new customers to pay existing customers—a system that could only work if they continued to receive new deposits.

Matt Turetzky, Kraken’s head of legal, responded to the accusations on X (formerly Twitter). He called the situation “wild,” explaining that Etana is accused of using the exchange’s funds for business costs and high-risk investments, and then allegedly providing inaccurate information for several years.

Turetzky stated that Etana’s lawyers advised them to be upfront and fully disclose everything to Kraken. However, he claims Kraken didn’t receive any compensation and was given excuses instead.

He highlighted Kraken’s massive size, noting it supports millions of users and handles hundreds of billions of dollars in transactions each quarter. He also warned that Kraken would aggressively pursue legal action against anyone who wronged them, relentlessly seeking justice.

Payward Completes Bitnomial Acquisition

As the legal case progresses, Payward revealed it has finalized the purchase of Bitnomial, a cryptocurrency platform authorized by the US Commodity Futures Trading Commission (CFTC). This acquisition was completed on Monday.

As an analyst, I’m seeing this acquisition as Payward securing a complete end-to-end infrastructure for trading derivatives in the US. Specifically, they now have everything needed – a Futures Commission Merchant, a platform to list and trade those contracts (a Designated Contract Market), and a clearing organization to finalize those trades. Essentially, they’ve built a full stack solution for US derivatives trading.

Payward announced that this new regulatory framework allows it to offer spot margin, perpetuals, and options trading – all regulated by the CFTC – to qualified customers in the US through Kraken and NinjaTrader.

Arjun Sethi, Co-CEO of the cryptocurrency exchange, explained that the completed deal establishes a US-regulated platform for trading derivatives specifically designed for digital assets, rather than being a modification of existing systems.

He explained that this technology is essential for developing their future products. Payward plans to begin with spot margin trading on Kraken, and then introduce perpetuals and options, all while complying with U.S. regulations from the CFTC.


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2026-05-05 13:57