Kraken has won a $22 million arbitration award against its former auditor Mazars USA, and co-CEO Arjun Sethi is framing the case as part of a broader campaign he and others in crypto call “Operation Chokepoint 2.0.”
What happened
Payward — Kraken’s parent company — asked the Delaware Court of Chancery on Tuesday to enter judgment on the arbitration award after prevailing against Mazars. The dispute centers on Mazars’ abrupt withdrawal from Kraken’s nearly completed 2022 audit. According to Sethi, Mazars left despite finding no fraud, raising no concerns about management, and reporting no disagreements — a move he says inflicted measurable financial harm on the exchange by disrupting banking relationships, licensing efforts and other services that depend on completed independent audits.
“An audit is not a favor. It is oxygen,” Sethi wrote, arguing that audits are critical infrastructure for financial firms and that lawful crypto companies were effectively cut off from basic financial services during the period in question.
Operation Chokepoint 2.0 and the regulatory backdrop
Sethi attributes Mazars’ decision to what industry participants call Operation Chokepoint 2.0 — an alleged coordinated effort to push banks, auditors and other service providers away from crypto firms. To bolster that claim, his letter points to a string of 2023–2024 developments: joint guidance from U.S. banking regulators, the SEC’s now-rescinded Staff Accounting Bulletin No. 121, and the collapse of crypto-focused banking rails such as Silvergate and Signature Bank’s Signet. He urged Congress to pass the CLARITY Act to create a dedicated market-structure law for digital assets rather than leaving firms subject to enforcement-driven uncertainty.
Kraken’s leadership response
Co-CEO Dave Ripley echoed Sethi on X (formerly Twitter), saying the $22 million award covers only part of the damage Kraken suffered during what he described as a coordinated campaign to cut the industry off from banking, auditors and other essential services.
Regulatory changes in motion
Meanwhile, regulators have been revisiting bank supervision practices tied to digital assets. In February, the Federal Reserve sought public feedback on a proposal to remove “reputation risk” from bank supervisory guidance — a follow-up to its 2025 directive asking supervisors to stop pressuring banks to drop customers over reputational concerns. Advocates say these shifts could help curb the kinds of pressure that underlie claims of a “chokepoint” strategy.
Kraken’s product push and public-listing plans
Despite the legal fight, Kraken has been expanding its product slate. The exchange recently enabled eligible non-U.S. users to use selected tokenized stocks and ETFs as collateral for futures and margin trading on Kraken Pro, adding 10 xStocks assets — including SPYx, QQQx, AAPLx, GOOGLx, TSLAx, NVDAx and others — so traders can back leveraged crypto positions without selling holdings.
Other recent moves: a May partnership with Franklin Templeton to introduce tokenized money-market products for collateral and cash management, and a June launch with Maple of an institutional crypto lending structure that uses a bankruptcy-remote vehicle for crypto-backed loans.
On the corporate side, Kraken — founded in 2011 — disclosed in November 2025 that it had confidentially filed a draft Form S-1 with the SEC. Press reports in May said the IPO may now be delayed until 2027 amid weak market conditions and ongoing cost-cutting.
Bottom line
The arbitration win marks a legal victory and a $22 million payout for Kraken, but the company is using the case to press a larger point about market access and regulatory clarity for crypto firms. As regulators revisit bank-supervision rules and Kraken expands services and readies for a potential IPO, the outcome could influence how audit, banking and market access dynamics evolve for the broader industry.
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