Kraken's Parent Company Sues Former Custody Partner Etana and Its CEO, Accusing Them of $25 Million Customer Fund Fraud

BlockBeats News, May 4th. According to the second amended complaint filed in a U.S. District Court in Colorado, the parent company of the cryptocurrency exchange Kraken, Payward, has accused its former custody partner Etana Custody and its CEO Dion Brandon Russell of embezzling over $25 million of customer funds.

The complaint also details multiple specific instances of alleged fund misuse, including diverting at least $16 million of funds related to Kraken into promissory notes issued by Seabury Trade Capital (later defaulted); using customer assets for forex hedging strategies but keeping any investment gains for themselves. During this time, Etana continued to show customers that their account balances were secure and intact.

Kraken is seeking at least $25 million in damages, as well as potential treble damages under civil theft claims, injunctive relief, and attorney's fees. The lawsuit also targets Russell individually, alleging that he had almost complete control over Etana's operations and directed the misuse and concealment of funds.

Kraken's Director of Litigation, Matt Turetzky, stated: "We have millions of users and tens of billions of dollars in quarterly trading volume... If you take our money or deceive our customers, we will find you, sue you, and pursue justice until it is served." As of the time of publication, Etana has not commented.