Payward, the parent company of Kraken, filed a lawsuit this week against Etana Custody and its CEO Brandon Rusell, accusing them of misappropriating more than $25 million in client funds through what it called a 'Ponzi-like' scheme. The complaint, lodged in court on May 11, alleges Etana commingled Kraken customer reserves with its own operating cash, used the money for expenses and a foreign-exchange hedging strategy, issued false account statements, and plugged shortfalls with fresh customer deposits. The suit marks the latest fallout from a partnership that began on July 31, 2018, when Kraken hired Etana to handle fiat on-ramp and off-ramp services.
How the alleged scheme worked
According to the filing, the trouble surfaced in April 2025 when Kraken tried to pull $25 million from Etana. The custodian couldn't fulfill the request. Payward's lawsuit claims Etana was running a classic red-flag operation: using one set of deposits to cover another, while sending Kraken account statements that showed healthy balances. Matt Turetzky, Kraken's litigation head, posted on X that Etana's own legal team had recommended disclosure but that Kraken kept getting excuses instead of answers. The exact timeline of when Kraken first alerted regulators isn't clear from the complaint, but the alleged pattern — covering shortages with new client money — is the core of the Ponzi-like accusation.
Bitnomial acquisition closes
Separately, Payward announced the completion of its acquisition of Bitnomial, a crypto-native derivatives platform licensed by the US Commodity Futures Trading Commission. The deal gives Payward a full set of US derivatives infrastructure: a futures commission merchant, a designated contract market, and a derivatives clearing organization. Arjun Sethi, Co-CEO of Kraken, said the acquisition provides 'a regulated US derivatives foundation purpose-built for digital assets.' Payward plans to offer CFTC-regulated spot margin, perpetuals, and options to eligible US clients on Kraken and NinjaTrader, beginning with spot margin. The timing is notable — the company is expanding its regulated footprint just as it pursues litigation over allegedly unregulated custody failures.
What comes next
The lawsuit against Etana is in its early stages; no court date has been set. Payward is seeking the return of the $25 million plus damages. On the derivatives side, the company says it will start rolling out spot margin products to US clients in the coming weeks. Both storylines will be closely watched by an industry that's seen custody scandals and regulatory approvals move in parallel before.
