Kraken Parent Payward Sues Etana Over Alleged $25 Million Crypto Custody Fraud

Kraken parent Payward used custodian Etana for fiat deposits and withdrawals over several years, entrusting it with hundreds of millions of dollars in assets. The case highlights counterparty risk in crypto markets: if custodians fail to segregate client funds, account balances may not be redeemable, undermining users’ confidence in asset security and custody arrangements.

Payward filed a second amended complaint against Etana and its CEO, Dion Brandon Russell, in the U.S. District Court for the District of Colorado on May 4, 2026. The complaint alleges that Etana delayed payment after Kraken sought to withdraw about $25 million in reserves in April 2025. It also alleges that Etana invested at least $16 million in promissory notes issued by Seabury Trade Capital, which later defaulted.