Svmuu News: Payward, the parent company of Kraken, has prevailed in arbitration against its former auditor, Mazars USA, with the arbitrator ruling that Mazars must pay Payward $22 million. Payward is currently seeking confirmation of the arbitration award and a final judgment from the Delaware Court of Chancery.
The dispute stems from the height of “Operation Choke Point 2.0” in 2022. Payward claims that Mazars abruptly withdrew from an audit of Kraken that was nearly complete and had found no issues with the company; however, this action caused reputational damage to Kraken and forced it to spend years and incur substantial legal fees to clear its name.
Arjun Sethi, co-CEO of Payward, stated that audits are not a “favor” for crypto companies, but rather critical infrastructure for maintaining banking relationships, licenses, counterparty relationships, and regulatory trust. When an audit firm withdraws without any negative findings, it casts unwarranted suspicion on the company.
“Operation Choke Point 2.0” is the crypto industry’s term for regulatory pressure during the Biden administration, referring to the informal pressure U.S. regulators exerted on banks to restrict services to crypto firms following the FTX collapse. Sethi noted that the U.S. FDIC had sent at least 25 letters to 24 banks, instructing them to suspend or refrain from expanding crypto-related business. This ruling is also seen as a legal counterattack by the crypto industry against such regulatory pressure.