Payward, the parent company of the cryptocurrency exchange Kraken, has filed a lawsuit against its former custody partner Etana and its CEO, Dion Brandon Russell, alleging that they misappropriated over $25 million in client funds. According to the complaint filed in the U.S. District Court in Colorado, Etana operated a scheme in which it commingled, spent, and falsely reported custodial assets to clients.
Kraken had entrusted Etana with hundreds of millions of dollars as part of a partnership, but when it tried to withdraw $25 million in reserve funds in April 2025, Etana allegedly stalled and provided misleading explanations. The complaint claims that Etana relied on new deposits to cover shortfalls and lacked the funds to meet the withdrawal request. Kraken's head of litigation, Matt Turetzky, stated that the company will pursue justice for the alleged deception of its customers.
Etana did not respond to a request for comment. The lawsuit highlights the issue of counterparty risk in the cryptocurrency market, where users rely on exchanges, lenders, and custodians to safeguard their funds. The case underscores the concern that customer funds may not be fully backed and may be exposed to operational and liquidity risks. Kraken is seeking at least $25 million in damages, as well as potential treble damages and injunctive relief.
The complaint also targets Russell personally, alleging that he controlled Etana's operations and directed the misuse and concealment of funds.