Kraken is turning a $22 million arbitration victory into a broader argument that the crypto industry’s years-long battle with regulators is far from over.

In a blog post, Payward, Kraken’s parent company, said it has asked the Delaware Court of Chancery to enter final judgment against former auditor Mazars USA after prevailing in arbitration over the firm’s decision to withdraw from Kraken’s nearly completed 2022 audit.

Benzinga contacted Mazars for comment, but did not recieve a response at the time of publication.

The Fallout With Mazars

According to Kraken, Mazars had audited the company’s financial statements for three consecutive years. During that time, it issued two clean audit opinions. The exchange said the third audit was nearing completion when Mazars resigned in December 2023.

Kraken said Mazars informed the company it had no disagreements with management, had identified no fraud, and had no concerns regarding the company’s integrity. Nevertheless, the auditor withdrew, citing uncertainty surrounding legal developments, including an SEC lawsuit filed against Kraken weeks earlier.

That lawsuit was later dismissed with prejudice, with no penalties, no admission of wrongdoing, and no required changes to Kraken’s business, according to the company.

Benzinga reached out to Mazars for comment but has not heard back.

‘Politically Expensive To Serve’

Kraken Co-CEO Arjun Sethi argued the auditor’s departure reflected a much larger problem than a contractual dispute.

“Mazars was pressured,” Sethi wrote, claiming the firm’s decision was part of a broader period in which banks, auditors and other financial institutions distanced themselves from digital asset companies amid heightened regulatory scrutiny.

"In December 2022, a year before quitting our audit, Mazars Group publicly halted its proof-of-reserves work for the entire crypto sector and pulled its reports off its own website. The firm was not walking away from bad clients. It was walking away from an industry that had become politically expensive to serve. We were the collateral damage," Sethi wrote.

The blog post noted that a series of regulatory actions made it increasingly difficult for crypto companies to access essential financial services. Sethi pointed to banking guidance issued by federal regulators, the SEC’s since-rescinded Staff Accounting Bulletin 121, and the collapse of crypto-focused banking networks at Silvergate and Signature Bank as evidence of what he described as sustained pressure on the industry.

Kraken’s claims also tie into a broader debate in crypto circles over what critics have labeled Operation Choke Point 2.0, a term used to argue that regulators pressured banks and financial institutions to distance themselves from digital asset companies without formally banning crypto activity.

While industry executives argue the approach amounted to a backdoor crackdown on crypto, regulators have said their actions were aimed at addressing financial stability and consumer protection concerns.

Sethi also described his own experiences with debanking, citing his investment firm Tribe Capital and several portfolio companies that lost banking relationships despite no findings of wrongdoing.

While much of the post recounts the industry’s regulatory battles over the past several years, its central message looks towards the industry’s future.

The Push For CLARITY

Sethi urged Congress to pass the CLARITY Act, arguing the legislation would establish clear jurisdiction over digital assets, create defined registration pathways for crypto businesses and provide greater legal certainty for developers building blockchain applications.

The push for the CLARITY Act has also faced consumer advocates, who argue the legislation could shift too much oversight away from the SEC and leave investors with fewer protections.

Nonprofit consumer organization, Consumer Reports, argued that moving broader portions of the digital asset market under the Commodity Futures Trading Commission (CFTC) could weaken disclosure requirements and enforcement tools traditionally associated with securities regulation

"This bill prioritizes regulatory certainty for the crypto industry at the expense of consumer protection," said Chuck Bell, advocacy program director at Consumer Reports.  "We need much stronger oversight of the crypto industry to ensure digital asset markets are fair, accountable, and built on the same standards that have protected investors and consumers for decades."

The arbitration win may strengthen Kraken’s argument that regulatory uncertainty hurt legitimate crypto businesses, but it does not resolve the broader debate over Operation Choke Point 2.0. As Congress weighs legislation like the CLARITY Act, the bigger question of how digital assets should fit into the financial system remains unanswered.

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