Payward sues PowerTrade over $7M misappropriation claim
In brief
- Payward filed lawsuit against PowerTrade alleging $7M misappropriation
- Second major fund-recovery lawsuit Payward launched in recent months
- Combined claims across two lawsuits exceed $32 million
- Industry scrutiny of asset custody intensified post-FTX collapse
Escalating Fund-Recovery Claims
Payward is now pursuing recovery of more than $32 million across two separate lawsuits, both centered on allegations of misappropriation. In May 2026, Payward filed an amended complaint against Etana Custody and its CEO, alleging the misappropriation of over $25 million in client reserves. That suit accused Etana of commingling funds and engaging in risky practices with assets that were supposed to be held safely on behalf of Kraken users.
No court filings have surfaced with granular allegations about how the $7 million was allegedly misappropriated, or over what timeframe the conduct occurred. Neither PowerTrade nor Payward has issued public statements elaborating on the dispute, leaving the specifics of the claim opaque to the broader market.
Settlement Networks and Counterparty Risk
The derivatives platform participated in Copper's ClearLoop settlement network alongside Kraken MTF as recently as mid-2024. Copper built ClearLoop specifically to reduce counterparty risk by allowing off-exchange settlement, a mechanism designed to lower exposure to platform failures.
Commingling of funds became a flashpoint for the entire industry after the FTX collapse in late 2022. That implosion exposed how quickly mismanaged or misappropriated client assets can evaporate, leaving users with no recovery path. Payward's twin lawsuits signal that even platforms with custody infrastructure and settlement partnerships face operational and trust vulnerabilities.
