Kraken Seeks Final Judgment After $22M Award Against Former Auditor

Sethi placed the episode within what critics call Operation Chokepoint 2.0, a term for what they describe as a coordinated effort by regulators to cut lawful crypto firms off from banking. In December 2022, a year before quitting the Kraken audit, Mazars Group halted proof-of-reserves work for the crypto sector.

The letter cited a chain of actions from 2022 and 2023. On January 3, 2023, the Federal Reserve and the FDIC, together with the Office of the Comptroller of the Currency, issued a joint statement warning that crypto business models raised safety and soundness concerns for banks. Documents released after a FOIA lawsuit showed the FDIC sent at least 25 letters to two dozen banks urging them to pause or refrain from expanding crypto activity. The SEC's SAB 121 accounting guidance required public companies holding crypto to record those assets on their balance sheets, making custody uneconomical for banks. The Federal Reserve denied a master account to Custodia, a Wyoming bank built for digital assets. In March 2023, the payment networks run by Silvergate and Signature shut down within days of each other.

Much of that framework has come undone. The SEC rescinded SAB 121, the banking regulators withdrew the joint statement, and a House committee report concluded that regulators used vague rules and informal pressure to push banks away from lawful digital asset firms.

The letters come as Kraken pursues a full European banking license, reportedly through Lithuania. That move would allow the company to offer traditional banking services across the European Economic Area and potentially become the first cryptocurrency exchange to secure a full European bank license, according to CoinDesk reporting.

Sethi closed the letter with a call for Congress to pass the CLARITY Act, which would establish market-structure rules for digital assets, dividing oversight between the CFTC and SEC. The House passed the bill in July 2025 by a vote of 294 to 134, with 78 Democrats in support. The Senate Banking Committee advanced its version in May.

Sethi contrasted the U.S. timeline with the European Union, where the MiCA framework took effect across member states.