Crypto Exchange Kraken Awarded $22 Million in Arbitration Ruling

Auditor's Sudden Exit Amid Regulatory Scrutiny

A recent arbitration decision has ordered Mazars USA to pay $22 million to Payward, the parent company of cryptocurrency exchange Kraken. The dispute arose after the accounting firm abruptly ceased an audit of Kraken in early 2023. This withdrawal occurred as the audit was nearing completion.

Kraken initiated legal action following Mazars' departure. The exchange contended that Mazars' actions were unjustified and caused significant disruption. The arbitration panel ultimately sided with Kraken in the matter.

What Was Operation Choke Point 2.0?

Mazars reportedly cited legal uncertaintyas its reason for abandoning the audit. This uncertainty stemmed from a lawsuit filed against Kraken by the U. S. Securities and Exchange Commission (SEC). The SEC's case against Kraken was later dismissed.

Arjun Sethi, Kraken's co-CEO, stated that Mazars claimed it was pressured by regulators. He suggested this pressure was part of a broader initiative known as „Operation Choke Point 2.0.”This initiative aimed to limit financial services for crypto companies.

# Why did Mazars USA stop auditing Kraken?

Operation Choke Point 2.0 was an alleged informal effort by regulators. Its goal was to discourage banks and financial institutions from working with cryptocurrency businesses. This pressure, according to some, led to a chilling effect across the industry.

Mazars had previously audited other major cryptocurrency firms. These included Binance and Crypto.com. The firm also performed work for former President Donald Trump's organization. Mazars announced in late 2022 that it would no longer serve crypto clients.

# What was the alleged „Operation Choke Point 2.0”?

The $22 million award represents a significant win for Kraken. It highlights the challenges crypto companies faced during a period of intense regulatory scrutiny. The arbitration ruling underscores the potential liabilities for firms that withdraw services without sufficient cause.

Mazars USA stated that legal uncertaintywas the reason for its withdrawal. This uncertainty was linked to a lawsuit filed by the SEC against Kraken, which was later dismissed.

# What other crypto companies did Mazars audit?

„Operation Choke Point 2.0”refers to an alleged regulatory effort. It aimed to pressure financial institutions to reduce or cease their services to cryptocurrency companies.

Before ceasing its crypto-related services, Mazars USA had also performed audits for other prominent cryptocurrency exchanges, including Binance and Crypto.com.