Key facts
- Kraken's parent company, Payward, is suing PowerTrade, a high-leverage derivatives platform.
- Payward alleges PowerTrade founders misappropriated $7.2 million in digital assets and unrealized gains.
- The lawsuit claims PowerTrade retroactively canceled profitable trades to create a negative balance and seize collateral.
- Kraken is seeking discovery from U.S. financial institutions to identify and freeze additional assets.
- An interim worldwide freezing order has been obtained from DIFC Courts against PowerTrade and its co-founders.
Kraken's parent company, Payward, has initiated legal action against PowerTrade, a high-leverage derivatives platform based in the UAE, alleging that the platform's founders misappropriated $7.2 million of Kraken's digital assets and unrealized gains. Payward filed an application with a U.S. federal court seeking discovery from various U.S.-based financial institutions to aid its legal proceedings against PowerTrade and its co-founders.
The lawsuit claims that PowerTrade improperly stripped over $6 million from Payward's account through a series of unilateral and unauthorized transactions. These included retroactively canceling profitable trades that had closed or settled months earlier, an effort to manufacture a negative balance in Payward's trading account and abscond with Payward's collateral, according to the filing.
Kraken began institutional cryptocurrency derivatives trading on PowerTrade in 2022. In October 2025, amid market declines, Kraken expressed concerns about PowerTrade's liquidity and creditworthiness and attempted to withdraw its funds, but was unsuccessful. The lawsuit alleges that PowerTrade then executed a series of unauthorized transactions, moving Kraken's account from a positive balance of over $6 million to a negative balance of nearly $2 million.
Payward stated that it is concerned PowerTrade will use this artificially created debt to appropriate Payward's bitcoin collateral. Kraken also confirmed it has obtained an interim worldwide freezing order from the DIFC Courts against PowerTrade and its co-founders and has commenced other legal proceedings in other jurisdictions.