Kraken Parent Accuses Etana of $25M Fund Misuse

TLDR

Table of Contents

Kraken’s parent company, Payward Inc., accused Etana Custody of misappropriating $25 million in client funds.
The company filed the allegations in the U.S. District Court in Colorado.
Kraken stated that Etana failed to return $25 million when it requested the funds.
The filing claimed that Etana and CEO Dion Brandon Russell operated a Ponzi-like enterprise.
Kraken alleged that Etana commingled client funds to cover operating expenses and risky investments.

Payward Inc., the parent company of cryptocurrency exchange Kraken, has accused Etana Custody of misappropriating $25 million in client funds. The company filed the claim in the U.S. District Court in Colorado and outlined allegations of fraud and fund commingling. The filing states that Etana and its chief executive operated a “Ponzi-like enterprise” that relied on new deposits to sustain operations.

Kraken Expands Legal Action Over Missing Funds

Payward Inc. stated that it entrusted Etana Custody with hundreds of millions of dollars in client assets. However, when Kraken requested the return of certain funds, Etana failed to deliver $25 million. As a result, Kraken initiated legal proceedings to recover the missing amount and related costs.

The filing asserts that the missing funds did not result from simple mismanagement or recordkeeping errors. Instead, Kraken alleged that Etana and CEO Dion Brandon Russell operated a “Ponzi-like enterprise that depended on the continuous flow of new customer deposits.” Kraken also claimed that Etana commingled customer funds to cover operating expenses and finance risky investments.

Kraken added a formal fraud claim against both Etana and Russell in its latest court filing. The company requested repayment of the $25 million, along with interest and attorney’s fees. Legal representatives for the defendants disputed the allegations, according to the court document.

Kraken emphasized that it discovered the alleged conduct during the discovery phase of the case. The filing stated that Etana’s inability to return funds reflected deeper operational issues. Therefore, Kraken seeks judicial relief through the Colorado federal court.

Regulatory Action and Ongoing Court Proceedings

The Colorado Banking Board placed Etana Custody into liquidation in November 2025. Regulators acted after determining that the custodian failed to maintain required capital levels. The liquidation marked a turning point in the dispute between the companies.

Court documents indicate that Etana could not meet regulatory capital standards before the board’s action. The filing referenced the liquidation as part of the broader context of the case. However, Kraken’s complaint focuses on the alleged $25 million shortfall.

Kraken’s legal action aims to hold both the company and its chief executive accountable. The exchange’s parent company maintains that the funds belong to clients and require immediate recovery. The court will now review the expanded fraud claim alongside existing allegations.

The defendants’ legal team continues to challenge the accusations in court. The U.S. District Court in Colorado will oversee the next stages of litigation. The case remains active following the November 2025 liquidation order.

✨ Limited Time Offer