Payward Files Lawsuit Accusing Etana CEO of $25M Custody Scheme
Payward, the parent entity behind cryptocurrency exchange Kraken, has initiated legal proceedings against custody firm Etana and its chief executive, alleging fraudulent mishandling of digital assets worth $25 million. The complaint centers on accusations that client funds under Etana’s custodial management were improperly mixed with other assets and deployed in unauthorized ways. According to the lawsuit, this conduct created what Payward characterizes as a scheme bearing hallmarks of a Ponzi operation, where new deposits may have covered obligations to earlier clients. The alleged misconduct reportedly came to light when Etana faced a liquidity shortage, exposing the underlying fund mismanagement. Kraken, which has built its reputation on security and regulatory compliance, appears to have been caught in the fallout when funds it believed were safely held in custody became inaccessible or unaccounted for. The exchange is now seeking to recover the full amount through the courts while drawing attention to custody risks that persist even among supposedly regulated financial intermediaries. This case highlights ongoing vulnerabilities in cryptocurrency infrastructure, particularly around third-party custody arrangements that many exchanges and institutions rely upon to safeguard client assets. The lawsuit arrives at a time when regulatory scrutiny of crypto custody practices continues to intensify globally. Market observers will be watching whether this case prompts exchanges to reassess their custody partnerships and due diligence procedures.
Source: CoinDesk | This article has been independently rewritten by Block Digest. Original reporting credit to the source.
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