Kraken parent Payward sues ex-custodian Etana, alleging $25 million in customer funds was misused

ChainCatcher reports that Payward, Kraken’s parent company, has filed a second amended complaint in the U.S. District Court for the District of Colorado against its former custody partner Etana Custody and Etana CEO Dion Brandon Russell. The suit alleges Etana misappropriated more than $25 million of customer funds and operated what Payward describes as a "Ponzi scheme." Payward claims Etana commingled client assets with company funds to pay operating expenses and fund high-risk investments, while masking shortfalls with falsified account statements. In April 2025, Kraken sought to withdraw roughly $25 million in reserve funds; the complaint says Etana stalled the withdrawal citing reconciliation issues and used new deposits to cover the gap. The filing also alleges at least $16 million was placed into promissory notes issued by Seabury Trade Capital, which later defaulted. Colorado regulators subsequently issued a cease-and-desist order against Etana. Etana entered liquidation proceedings in November 2025 and is now under court-appointed receivership. Payward is seeking at least $25 million in damages, plus treble damages for civil theft.