Kraken Custody Case: Payward don sue Etana for $25M over Ponzi wahala

Payward, di parent company for crypto exchange Kraken, don file lawsuit against dia custodian Etana Custody and CEO Brandon Rusell. Payward dey accuse say Etana run way more than $25 million from client reserve funds and do one “Ponzi-like” scheme. Di complaint talk say for April 2025 when Kraken try withdraw $25 million, di withdrawal fail because liquidity shortfall. E also claim Etana mix Kraken client reserves with im own operating funds, use incoming deposits to fill gaps, and show misleading balance disclosures and dashboard numbers wey make am look like funds dey fully secured. Kraken legal chief Matt Turetzky call di matter “wild”, say Etana spent exchange money on operating expenses and risky investments before dem give disclosures wey overstate how secure di funds be. Separate, Payward say dem don complete acquisition of Bitnomial, one CFTC-licensed crypto derivatives platform. Payward present di deal as upgrade to im US derivatives stack (FCM, DCM, DCO) to support CFTC-regulated spot margin, perpetuals, and options for eligible US clients on Kraken and NinjaTrader. For traders, di Kraken custody lawsuit na reminder how custody or counterparty failures fit quickly turn to real liquidity stress. Short-term, e fit make people wary about settlement and custody counterparties; long-term, recovery timelines and any damages claims fit still dey uncertain.