Kraken’s Payward Files Lawsuit Against Crypto Custodian Etana, Alleging $25M Ponzi Plot

Payward, the parent company of cryptocurrency exchange Kraken, has filed a lawsuit against its very own crypto custodian, Etana Custody, and its CEO, Brandon Rusell, alleging that Etana misappropriated more than $25 million in client funds and operated what Payward characterizes as a “Ponzi-like” scheme. 

Etana Misused Kraken Reserves

The dispute traces back to a partnership formed through Payward. According to the timeline provided, on July 31, 2018, Kraken—via Payward—partnered with Etana Custody to support fiat on-ramp and off-ramp services. 

Payward’s filing then points to a major breakdown in April 2025, when Kraken attempted to withdraw $25 million, and Etana was allegedly unable to meet the request.

The lawsuit contends that Etana allegedly commingled Kraken customer reserves with its own operational funds, using money for operating expenses, and a foreign-exchange hedging strategy where, Payward alleges, profits were kept while customer funds were at risk. 

Kraken’s parent company further claims that Etana issued false account statements and dashboard balances showing funds as fully secured and available, even though internal records allegedly indicated shortages.

When those shortages allegedly emerged, Payward says Etana covered them by drawing on new customer deposits to satisfy older obligations—an arrangement that, if true, would continue only as long as new money kept arriving. 

Kraken’s litigation head, Matt Turetzky, addressed the allegations in a post on X (formerly Twitter). In that message, he said the situation was “wild,” describing claims that Etana spent the exchange’s money on operating expenses and risky investments, then allegedly sent misleading statements for years. 

Turetzky also asserted that Etana’s own legal team recommended a “prompt, complete, and transparent disclosure” to Kraken, but that, according to his account, instead of receiving restitution, Kraken was met with excuses. 

He emphasized Kraken’s scale—stating it serves “millions of users” and processes “hundreds of billions of dollars in quarterly transaction volume”—and said Kraken would “find you,” “sue you,” and “not stop until justice has been served.”

Payward Completes Bitnomial Acquisition

While the lawsuit unfolds, Payward also announced a major corporate step completed during Monday’s developments: it has finished its acquisition of Bitnomial, a crypto-native derivatives platform licensed by the US Commodity Futures Trading Commission (CFTC). 

Payward says this deal gives it what it calls the full US derivatives infrastructure stack, comprising a Futures Commission Merchant (FCM), a Designated Contract Market (DCM), and a Derivatives Clearing Organization (DCO).

In its release, Payward described this regulatory setup as the platform that enables it to bring CFTC-regulated spot margin, perpetuals, and options to eligible US clients on Kraken and NinjaTrader. 

Arjun Sethi, the cryptocurrency exchange’s Co-CEO, said the closing of the transaction provides a regulated US derivatives foundation “purpose-built for digital assets, not adapted to them.” 

He added that the stack “is what makes the next set of products possible,” with Payward starting with spot margin on Kraken and planning for perpetuals and options to follow—all under CFTC regulation within the United States.

Featured image from OpenArt, chart from TradingView.com