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Payward Inc., the parent company behind crypto exchange Kraken, has filed a lawsuit against crypto derivatives platform PowerTrade, alleging the firm misappropriated roughly $7 million. The legal action marks the second major fund-recovery lawsuit Payward has launched in recent months, following a separate complaint involving even larger sums.
What we know about the dispute
The details of the complaint remain thin in public view. No court filings have surfaced with granular allegations about how the $7 million was allegedly misappropriated, or over what timeframe the conduct is said to have occurred.
What is clear is the relationship between the two parties. PowerTrade and Kraken entities were not strangers. The derivatives platform participated in Copper’s ClearLoop settlement network alongside Kraken MTF as recently as mid-2024, a setup designed to let institutional traders settle trades without moving assets to a centralized exchange.
Neither PowerTrade nor Payward has issued public statements elaborating on the dispute. No regulatory actions tied to the case have been reported.
A pattern of aggressive fund recovery
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.
Combined with the PowerTrade action, Payward is now pursuing recovery of more than $32 million across two separate lawsuits, both centered on the same core accusation: someone else lost or misused money that belonged to Payward or its customers.
The Etana case involves far more detailed public allegations, including claims about the commingling of reserves, a practice that became a flashpoint for the entire industry after the FTX collapse in late 2022. The PowerTrade suit, by contrast, is earlier in its lifecycle and lacks the same level of public documentation.
Why this matters for the broader market
The ClearLoop connection is especially notable. Copper built ClearLoop specifically to reduce counterparty risk by allowing off-exchange settlement. The fact that two participants in that network are now in a legal dispute over alleged fund misappropriation is, to put it mildly, not a great advertisement for the model’s ability to prevent all forms of financial misconduct between partners.
That said, there is no indication that ClearLoop itself is implicated in the allegations. The network was a point of operational overlap between Payward and PowerTrade, not necessarily the mechanism through which funds were allegedly misappropriated.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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