A long-running grudge between a crypto exchange and its old accountant has produced a rare outcome: the accountant losing. Payward, the company behind the crypto exchange Kraken, says an arbitrator has awarded it $22 million in damages from Mazars, the global accounting firm that walked away from Kraken's audit near the finish line, Cointelegraph reported. Kraken is now asking a Delaware court to confirm the award as a binding judgment.

What "arbitration" and the award mean

Arbitration is a form of private dispute resolution: instead of a public court trial, both sides argue before a neutral arbitrator whose decision is generally binding. Winning an award is not the end, though. To make it fully enforceable, and to head off challenges, the winner typically asks a court to "confirm" it and enter it as a judgment, which is the step Kraken says it is now taking in Delaware.

Why Mazars walked away

By Kraken's account, Mazars quit its 2022 audit in December 2023, only days before it was due to sign off, as the company described it. Kraken says the firm cited legal uncertainty, pointing to a US Securities and Exchange Commission complaint filed against the exchange weeks earlier, a case that was later dismissed. Kraken maintains that Mazars raised no concerns about fraud or the company's own numbers. Mazars has not detailed its side publicly, and these characterizations are Kraken's.

The exchange argues the withdrawal was costly. A completed audit is not a nicety in crypto; it is often required to keep banking relationships and to hold the state money-transmitter licenses that let an exchange operate. Kraken says losing its auditor at the last minute created a licensing problem it had to solve partly by acquiring another firm's licensed entity, an expense that made up a large chunk of the damages the arbitrator awarded.

Part of a bigger auditor retreat

The dispute is a specific case with a general backdrop. After the collapse of the exchange FTX in late 2022, crypto companies rushed to reassure customers with "proof of reserves," a limited check in which an outside firm confirms that a platform actually holds the crypto assets it owes its users at a point in time. It is far narrower than a full audit of a company's financial statements.

Mazars was one of the firms doing that work, for exchanges including Binance and Crypto.com, until it abruptly paused all crypto engagements in December 2022, CNBC reported at the time. It was part of a broader flight by established auditors wary of the reputational and legal risks of vouching for digital-asset firms, which left the industry short of the very credibility checks its customers were demanding.

Why it matters

For the crypto industry, the case cuts to a persistent weakness: its uneasy, on-again-off-again relationship with the traditional financial plumbing it needs to look legitimate. Exchanges want audits and banking; auditors and banks often want to keep their distance. If a court confirms Kraken's award, it would establish that an auditor can be made to pay for abandoning a client mid-engagement, a precedent that could make firms think harder before signing up crypto clients, or before dropping them. For now, it is one exchange's win, still awaiting a judge's stamp, in a fight that says as much about the industry's standing as about one soured contract.