Kraken Sues PowerTrade Over Alleged $7.2M Crypto Theft

The case exposes a counterparty risk specific to unregulated crypto derivatives platforms. Retroactive cancellation of settled trades is not possible on exchange-based clearing; it relies on a platform's unilateral control over settlement books. For institutional clients, the episode underscores the importance of verifying trade finality rules and withdrawal rights before committing capital to high-leverage venues. PowerTrade offered leverage often exceeding 100x and operated out of El Salvador, outside major financial regulators' oversight. Kraken began institutional crypto derivatives trading on PowerTrade in 2022, when the platform was co-founded by CEO Mario Gomez Lozada and CFO Bernd Sischka.

Payward is pursuing legal action in at least two jurisdictions: a worldwide freezing order from the Dubai International Financial Centre Courts, and a discovery request in a U.S. federal court to find additional assets. That dual-track strategy suggests Kraken believes PowerTrade's holdings may be scattered across accounts in multiple countries. If the freezing order stands and assets are recovered, the risk to other clients would shrink. Conversely, if PowerTrade's founders challenge the order or dissipate funds before courts act, the episode could set a precedent for how rogue operators exploit settlement flexibility in crypto derivatives.

PowerTrade did not respond to a request for comment by press time. A hearing on the U.S. discovery request is expected in the coming weeks; the DIFC freezing order remains in effect. For traders using similar platforms, this is a reminder that leverage cuts both ways: counterparty risk is highest where settlement rules are opaque and trade corrections are discretionary.