Payward Sues Etana Custody Over Alleged $25 Million Client Fund Misappropriation

Payward, the parent company of cryptocurrency exchange Kraken, has filed a lawsuit against Etana Custody and its CEO, Dion Brandon Russell. The complaint alleges that Etana misappropriated over $25 million in client funds, which were entrusted to the company as part of a fiat on-ramp partnership.

According to the complaint, when Kraken tried to withdraw roughly $25 million in reserve funds in April 2025, Etana fabricated reconciliation issues and provided misleading explanations. The exchange claims that Etana lacked sufficient funds to fulfill the withdrawal and instead used incoming deposits to cover the shortfall.

The lawsuit outlines several specific instances of alleged misuse of client funds, including deploying at least $16 million into defaulted promissory notes issued by Seabury Trade Capital. Etana is also accused of using customer assets to finance a foreign-exchange hedging strategy while retaining associated investment income for itself.