Kraken's parent company alleges custodian Etana misappropriated $25 million

Plaintiffs Payward, Inc., the parent company of cryptocurrency exchange Kraken, alleges that a firm it entrusted to custody client funds misappropriated $25 million, according to a court filing.

Kraken had engaged Etana Custody to act as custodian for client funds, but when Kraken asked Etana to return those funds, the digital-assets custodian failed to return $25 million.

Through discovery, Kraken said in its filing with the U.S. District Court in Colorado, it discovered Etana's inability to return the money "was not the result of mere mismanagement or poor recordkeeping," but instead due to the company and CEO Dion Brandon Russell operating a "Ponzi-like enterprise that depended on the continuous flow of new customer deposits."

Kraken alleges Etana commingled funds, in part, to fund "operating expenses and fund risky investments." The cryptocurrency exchange entrusted Etana with hundreds of millions of dollars, according to the filing. 

The Colorado Banking Board placed Etana into liquidation in November 2025 after the custodian was unable to maintain capital requirements.

With the new filing, Kraken has added a claim of fraud against Etana and Russell. The legal representatives for the defendants dispute the allegations, the filing said.

Kraken is asking that both Etana and Russell pay back the $25 million plus interest and attorney's fees.