Kraken Sues Mazars for $22M After Auditor Walked Out

Kraken's parent company Payward Inc. is heading back to court, this time not as a defendant but as a plaintiff. The company filed suit to enforce a $22 million arbitration award against Mazars USA, the accounting firm that abandoned its Kraken audit in late 2023 just days before finishing the job, according to court records.

The SEC's lawsuit against Kraken landed in 2023. Within roughly a month, Mazars stopped work on the exchange's 2022 financial audit. The connection between those two events is not subtle. Court filings show that Mazars received subpoenas from both a federal grand jury and the SEC requesting the firm's Kraken files. The SEC's complaint against Kraken also cited what appeared to be comments or findings pulled directly from Mazars' own audit workpapers, a detail that put the accounting firm in a genuinely difficult position.

So Mazars faced a choice: keep working for a client that regulators were actively targeting, with its own internal files being subpoenaed and apparently appearing in federal case materials, or find a way out. It found a way out. The firm halted work on the audit days before completion and never delivered the finished product Kraken needed.

The retreat by Mazars USA wasn't happening in isolation, but rather as part of a broader pullback by major accounting firms that had grown increasingly wary of the regulatory exposure that came with auditing crypto exchanges in the post-FTX environment. Mazars had already stepped away from crypto proof-of-reserve work in 2022, citing concerns about how such reports were being interpreted publicly. Its decision to leave Kraken mid-audit fit that pattern exactly.

That created a concrete operational problem. Kraken needed audited financials to obtain state money transmitter licenses, and those licenses were required to keep operating legally across the US. A retired judge handling the subsequent arbitration called Mazars' withdrawal a 'licensing crisis' for Kraken, finding that the unfinished audit directly jeopardized the exchange's ability to function in regulated markets.

A retired judge presiding over the confidential arbitration sided with Kraken and set damages at $22 million. Redacted copies of his decisions, filed as part of Kraken's lawsuit to enforce the award, show that $12.5 million of the total was tied to costs from Kraken's acquisition of TradeStation Crypto, an investment platform the exchange purchased partly because it already held regulatory licenses. The timing of the Mazars exit made those licenses harder to put to use and drove acquisition-related costs well beyond what the exchange had planned for.

The arbitration records also note that Mazars stopped work roughly a month after the SEC filed its complaint against Kraken, a timeline that makes the causation hard to argue around. Mazars received grand jury and SEC subpoenas for its Kraken files, and those files apparently showed up in the SEC's own case materials. Whether the accounting firm had a real choice under those circumstances is a fair question. The arbitrator, apparently, was not moved by it.

His ruling gave Mazars some credit. He wrote that the firm deserved 'credit for being honest,' noting it had been upfront about its situation. But that acknowledgment did not change the outcome. He still found that Mazars owed Kraken for the damage its departure caused, regardless of the difficult conditions surrounding the audit.

The SEC withdrew its lawsuit against Kraken in March 2025, shortly after President Trump began his second term. The Trump administration has broadly rolled back crypto enforcement, and the president himself reported $1.4 billion in income tied to crypto ventures in his most recent financial disclosure. For Kraken, the dismissal confirmed what the exchange had maintained throughout: it had not done anything that warranted a federal enforcement action.

None of that erases the cost Kraken says it absorbed during the years it spent in regulatory limbo. Mazars, now operating as part of the Forvis Mazars group, is the 10th largest accounting firm in the US with roughly $2.2 billion in annual revenue. The firm previously counted Trump among its clients and spent years in litigation defending his financial records from investigators during the Biden administration. A spokesman for Forvis Mazars did not respond to a request for comment.

Kraken won the arbitration. The SEC packed up and left. Now Payward is just trying to cash the check.