Kraken Lawsuit Exposes Alleged $25M Ponzi Scheme by Former Custody Partner Etana
Kraken has filed a $25 million lawsuit against former custody partner Etana, alleging a Ponzi scheme that diverted client assets.Summary
Kraken has filed a $25 million lawsuit against its former custody partner, Etana, alleging a classic Ponzi scheme that diverted client assets. The legal action, submitted in a Colorado federal court, claims Etana used new client deposits to cover operational gaps. The complaint details that Etana, which handled Kraken's fiat deposits and withdrawals, diverted client funds for operating expenses and risky investments. When losses mounted, the firm allegedly used new deposits to cover shortfalls, a pattern consistent with a Ponzi scheme. Kraken discovered the fraud during a routine audit in 2023 and immediately terminated the partnership. The lawsuit seeks $25 million in damages and highlights the critical need for due diligence in crypto partnerships. The case is currently before a Colorado federal court, with no trial date set yet. This incident raises serious questions about custody security and may lead to stricter regulatory oversight of third-party custodians in the cryptocurrency industry.
(Source：Home - Bitcoinworld.co.in)