Payward, the parent company of crypto exchange Kraken, has won a $22 million arbitration award against former auditor Mazars USA. The dispute centers on the auditor's withdrawal from a nearly completed 2022 financial audit, despite no signs of fraud or management issues being found.
Payward has asked the Delaware Court of Chancery to enter judgment on the award. The company directly ties the case to Operation Chokepoint 2.0, an informal pressure campaign against banks, auditors and other financial institutions that worked with lawful crypto companies in 2022 and 2023.
An Audit That Never Reached the Finish Line
According to Kraken co-CEO Arjun Sethi, Mazars USA auditors had reached nearly the final stage of reviewing Payward's 2022 financial statements. The firm raised no concerns about the accuracy of the financial data or the integrity of management, and reported no disagreements with leadership. Despite that, Mazars abruptly withdrew from the engagement, leaving the company without a finished report right as banks were tightening requirements for crypto clients.
Lacking a completed audit in 2022 and 2023 made it significantly harder for crypto exchanges to secure banking services, licenses and partnerships with other financial institutions. That is why Sethi described an audit not as a favor, but as a basic condition for this type of business to survive.
What Operation Chokepoint 2.0 Actually Means
The term was coined by venture investor Nic Carter in 2023 to describe informal pressure from US regulators on banks. After Silvergate Bank and Signature Bank collapsed in early 2023, financial institutions widely closed accounts of crypto companies and declined further cooperation without public explanation. No formal document carries this name; it is a collective label for dozens of separate contract terminations.
Kraken is one of the oldest centralized crypto exchanges, where users trade Bitcoin, Ethereum and other assets, and the company has repeatedly complained about similar pressure since 2023. This arbitration marks the first time such an episode was resolved in favor of a crypto company rather than a bank or an auditor.
How Kraken's Leadership Responded
In a letter published Tuesday, Sethi laid out the core problem facing the crypto industry.
"An audit is not a favor. It is oxygen."
- Arjun Sethi, Kraken (Payward) co-CEO, from a shareholder letter dated July 7, 2026
He added that independent audits are essential for crypto companies to obtain banking services, licenses and other business relationships. Co-CEO Dave Ripley called the story painful to revisit but worth surfacing on X, noting that only a fraction of similar episodes from that period have ever been made public.
Sethi also called on Congress to pass the CLARITY Act, a market structure bill that he argues would set clearer rules for digital assets and reduce companies' exposure to targeted regulatory pressure like the one Payward faced.
Consequences for Auditors and Crypto Companies
Kraken's arbitration win sets a precedent other companies in the industry could use. Key consequences include:
- Crypto companies now have an argument for lawsuits against auditors who withdraw without documented cause
- Audit firms face financial liability risk for terminating engagements under external pressure
- Banks and regulators face closer scrutiny over informal pressure on crypto exchange partners
- The push for the CLARITY Act gained an added argument in the form of a concrete financial loss tied to unclear rules
For centralized exchanges, a completed audit remains a basic requirement for working with banks and regulators across jurisdictions. Without one, licensing in new markets or opening corporate accounts becomes a far slower and costlier process.
Why This Precedent Matters for the Industry
Until now, most Chokepoint 2.0 stories remained at the level of accusations without judicial confirmation. The arbitration ruling in Payward's favor is the first major case where an independent body found financial harm from a severed audit relationship justified and awarded concrete compensation.
It could push other companies that lost auditors or banking partners during the same period to review their contracts and weigh similar claims. For audit firms, the ruling sends a signal: walking away from an engagement without documented cause now carries a price.
What It Means for the Market
The $22 million award is the first major precedent of a crypto company winning compensation for a severed audit relationship during the 2022-2023 pressure campaign. For the industry, it signals that banks and auditors can no longer terminate contracts without consequences. Whether the Delaware court's review of the award turns this case into a template for other companies affected during the same period remains to be seen.
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