Kraken sues PowerTrade over $7.2M in misappropriated funds
In brief
- Payward sued PowerTrade for misappropriating $7.2 million in digital assets and unrealized gains
- PowerTrade allegedly retroactively canceled profitable trades to create a negative account balance
- Kraken secured worldwide freezing order from Dubai courts and filed U.S. discovery requests
The Account Manipulation
PowerTrade improperly stripped more than $6 million from Payward's PowerTrade account through unilateral and unauthorized transactions, according to the legal filing. The platform retroactively canceled Payward's profitable trades that had closed or settled months earlier to manufacture a negative balance. Rather than returning the funds, PowerTrade carried out approximately 100 "corrections" related to expired or settled trades. Kraken's account moved from holding more than $6 million to a negative balance of nearly $2 million through these transactions.
Timeline and Response
In 2022, Kraken began institutional cryptocurrency derivatives trading on PowerTrade. The exchange operated on the platform for years without incident. In October 2025, when bitcoin's price fell and markets declined, Kraken became concerned about PowerTrade's liquidity and creditworthiness and attempted to withdraw its funds but was unable to do so.
Payward moved quickly through the courts. The company obtained an interim worldwide freezing order from the Dubai International Financial Centre Courts against PowerTrade and its co-founders. Payward also filed an application with a U.S. federal court seeking discovery from various U.S.-based financial institutions regarding PowerTrade and its founders.
The Platform and Founders
PowerTrade is a high-leverage derivatives platform based in the U.A.E., operated out of El Salvador and co-founded by CEO Mario Gomez Lozada and CFO Bernd Sischka. The platform served as a venue for institutional crypto derivatives trading before the alleged misappropriation occurred.
"PowerTrade and its co-founders misappropriated $7.2 million of Payward's digital assets and unrealized gains. Payward's legal proceedings seek the return of those funds." — Kraken spokesperson
