Kraken Wins $22M Arbitration Against Ex-Auditor Mazars

Payward Inc., the parent company of crypto exchange Kraken, won a $22 million arbitration award against Mazars USA. The auditor walked away from a nearly finished financial review in late 2022.

Mazars was one of the first traditional audit firms to offer proof-of-reserve reports for crypto exchanges after the FTX collapse. Those reports aimed to show exchanges held enough assets to cover user balances. In December 2022, Mazars pulled back from all crypto-related work, citing concerns about public understanding of the reports. This occurred during a period of intensified regulatory pressure on crypto, often called Operation Chokepoint 2.0.

Kraken had hired Mazars for a full financial audit, not just a proof-of-reserve check. The work was near completion when Mazars withdrew. Kraken took the dispute to arbitration. The panel ruled that Mazars breached its contract. The award covers wasted costs and legal fees, plus compensation for reputational harm, according to people familiar with the decision.

The outcome is a rare win for a crypto exchange in a contract dispute with a service provider. Most exchanges that used Mazars for proof-of-reserve reports scrambled to find new auditors. Some, like Binance, switched to independent third-party firms. Others stopped publishing reserve reports. Kraken later hired a different auditor and finished its financial review.

The case does not set a binding legal precedent outside arbitration. Lawyers said it signals that service providers cannot exit contracts without consequences. The outcome could make other audit firms think twice before taking on crypto clients for major engagements.