Kraken sues former auditor Mazars for $22 million

The legal battle stems from Mazars' decision to halt work on Kraken’s 2022 financial audits just days before completion. At the time, the exchange was under investigation by the U.S. Securities and Exchange Commission and struggling to secure state money transmitter licenses. According to court records, Mazars received subpoenas from both a grand jury and the SEC shortly before the firm walked away from the engagement. The SEC’s subsequent complaint against Kraken even cited findings that appeared to originate from Mazars' own internal audit workpapers.

Kraken argues that the auditor's exit left the firm with an unearned reputation for instability. Arjun Sethi, co-CEO of Payward Inc., stated that the company spent years and millions in legal fees clearing its name despite the auditor finding no formal issues with the firm's financials. The arbitration award includes $12.5 million specifically tied to Kraken’s acquisition of TradeStation Crypto, a move the exchange made primarily to bypass licensing delays. While the arbitrator acknowledged that Mazars faced difficult, high-pressure circumstances and noted that Kraken’s internal accounting automation was lagging, the firm ultimately ruled that Mazars remained liable for the financial fallout caused by its departure.