TechFlow News, May 4: According to CoinDesk, Payward—the parent company of Kraken—filed a second amended complaint in the U.S. District Court for the District of Colorado against its former custody partner Etana Custody and its CEO Dion Brandon Russell, alleging misappropriation of over $25 million in customer funds and operation of a “Ponzi scheme.” Payward alleges that Etana commingled custodied assets with its own funds to cover operational expenses and make high-risk investments, while using falsified account statements to conceal the resulting shortfall. In April 2025, when Kraken attempted to withdraw approximately $25 million in reserve funds, Etana delayed the withdrawal citing fictitious reconciliation issues and instead relied on new deposits to cover the shortfall.
Of this amount, at least $16 million was invested in promissory notes issued by Seabury Trade Capital, which later defaulted. Subsequently, Colorado state regulators issued a cease-and-desist order against Etana, which entered liquidation proceedings in November 2025 and is currently under court-appointed receivership. Kraken is seeking at least $25 million in damages plus treble civil theft penalties.
