Kraken sues PowerTrade over alleged $7.2M misappropriation and unauthorized trade “corrections”
Payward, the parent of cryptocurrency exchange Kraken, has filed for court discovery in the US against UAE-based high-leverage derivatives platform PowerTrade and its co-founders, alleging misappropriation of Kraken’s digital assets and unrealized gains.
According to the filing, PowerTrade “misappropriated” $7.2 million of Payward’s funds. Kraken claims the firm stripped more than $6 million through unilateral, unauthorized transactions. The mechanism described is a block of roughly 100 retroactive “corrections” that canceled trades that had already expired or settled months earlier—moves Payward says were designed to manufacture a negative balance and then use that “debt” to appropriate BTC collateral.
Kraken says it tried to withdraw funds in October 2025 after concerns about PowerTrade’s liquidity and creditworthiness, but was unable to access them. The lawsuit alleges PowerTrade then moved the account from a positive position (over $6 million) to a nearly $2 million deficit.
Kraken also states it already obtained an interim worldwide freezing order through the Dubai International Financial Centre (DIFC) Courts and started proceedings in other jurisdictions. The additional discovery request aims to identify more assets to freeze.
PowerTrade did not respond to requests for comment at the time of publication.
Bearish
This is a company-specific legal dispute in crypto derivatives, not a protocol-level change. Still, Kraken’s allegations—retroactive “corrections,” a shift from a multi-million positive balance to a near $2M deficit, and an attempt to seize BTC collateral—signal elevated counterparty and operational-risk concerns in leveraged venues.
Traders typically react to these events by widening perceived risk premia in derivatives (higher funding volatility, wider spreads, more cautious margin behavior), especially when regulators or courts issue asset-freezing orders. Even if most market participants are not directly exposed, the headlines can temporarily reduce appetite for high-leverage strategies.
In the short term, the most likely impact is a risk-off tone for exchange/derivatives counterparties and a preference for safer counterparties or lower leverage. In the long term, outcomes depend on whether PowerTrade’s assets are successfully frozen and returned. If courts validate Kraken’s claims, it can improve enforcement credibility for asset custody, but the immediate effect is typically negative for sentiment around similar leveraged platforms.