Key Takeaways
- • Payward (Kraken's parent company) alleges PowerTrade, a UAE-based crypto derivatives platform, misappropriated more than $6 million in digital assets and unrealized trading gains through unauthorized account manipulations.
- • PowerTrade allegedly retroactively canceled profitable trades that had closed or settled months prior, converting Payward's positive account balance of approximately $6–7 million into a $2 million deficit to manufacture justification for seizing collateral.
- • Payward filed a federal court application seeking discovery from U.S.-based financial institutions to obtain information about PowerTrade and its co-founders to support the litigation.
- • The lawsuit represents Kraken's escalation of enforcement action within the crypto derivatives sector, with the exchange emphasizing commitment to "decisive action to help protect the crypto industry."
Summary
Payward, the parent company of cryptocurrency exchange Kraken, has initiated legal proceedings against PowerTrade, a high-leverage derivatives platform based in the United Arab Emirates, alleging the firm and its co-founders misappropriated more than $6 million in digital assets and unrealized gains from Payward's trading account. The lawsuit, filed in U.S. federal court on June 25, 2026, centers on a series of unauthorized transactions that Payward claims were designed to strip collateral from its account through fraudulent manipulation of historical trades.
According to the legal filing, PowerTrade improperly executed unilateral "corrections" that retroactively canceled Payward's profitable trades—positions that had already closed or settled months earlier. Through this sequence of unauthorized adjustments, PowerTrade allegedly transformed Payward's positive account balance of approximately $6–7 million into a $2 million deficit. Payward's legal team characterizes these actions as a deliberate scheme to manufacture a negative balance that would provide PowerTrade with legal cover to abscond with Payward's trading collateral.
To advance the case, Payward filed an application with the U.S. federal court seeking discovery from various U.S.-based financial institutions regarding PowerTrade and its founding principals. This discovery request is designed to establish connections, financial flows, and institutional relationships that may support Payward's claims and aid in asset recovery efforts. In a statement to CoinDesk, a Kraken spokesperson said the exchange is "committed to decisive action to help protect the crypto industry," signaling broader institutional concern about operational integrity within the derivatives trading ecosystem.
The litigation underscores ongoing compliance and operational control challenges in the unregulated derivatives segment of the crypto markets, where high-leverage platforms operate with minimal oversight. The case may set precedent for how institutional crypto firms address fund misappropriation claims against offshore derivatives venues.
According to the legal filing, PowerTrade improperly executed unilateral "corrections" that retroactively canceled Payward's profitable trades—positions that had already closed or settled months earlier. Through this sequence of unauthorized adjustments, PowerTrade allegedly transformed Payward's positive account balance of approximately $6–7 million into a $2 million deficit. Payward's legal team characterizes these actions as a deliberate scheme to manufacture a negative balance that would provide PowerTrade with legal cover to abscond with Payward's trading collateral.
To advance the case, Payward filed an application with the U.S. federal court seeking discovery from various U.S.-based financial institutions regarding PowerTrade and its founding principals. This discovery request is designed to establish connections, financial flows, and institutional relationships that may support Payward's claims and aid in asset recovery efforts. In a statement to CoinDesk, a Kraken spokesperson said the exchange is "committed to decisive action to help protect the crypto industry," signaling broader institutional concern about operational integrity within the derivatives trading ecosystem.
The litigation underscores ongoing compliance and operational control challenges in the unregulated derivatives segment of the crypto markets, where high-leverage platforms operate with minimal oversight. The case may set precedent for how institutional crypto firms address fund misappropriation claims against offshore derivatives venues.
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