Kraken Parent Company Sues Etana Custody for Alleged Crypto Fraud

Kraken's parent company Payward has filed a lawsuit against Etana Custody, alleging $25 million in crypto custody fraud. The complaint claims that Etana operated a 'Ponzi-like' scheme, misusing client funds for operating expenses and risky investments.

The lawsuit alleges that Etana Custody, which is currently undergoing Chapter 11 bankruptcy proceedings, commingled assets, spent on operating expenses, and made false reports to clients. Kraken claims that it entrusted Etana with hundreds of millions of dollars over several years as part of a fiat on-ramp partnership.

Kraken is seeking at least $25 million in damages, along with potential treble damages under civil theft claims, plus injunctive relief and attorneys' fees. The complaint also targets Etana's CEO, Dion Brandon Russell, alleging that he directed the misuse and concealment of funds.