Kraken Sues NZ Partner Over Alleged $25 Million Misappropriation
Kraken, the US-based cryptocurrency exchange and official crypto exchange supporter of FIFA's World Cup, has taken aim at New Zealand company Etana Custody Ltd in a Colorado court case. Kraken alleges that Etana Custody Ltd, its associated Colorado company Etana Custody Inc, and Dion Brandon Russell, founder, major shareholder, and director of Etana Custody Ltd, misappropriated more than $25 million of custodial funds belonging to Kraken and its customers.
Kraken claims that Etana Custody Ltd was a 'Ponzi-like enterprise' that relied on the continuous flow of new customer deposits to mask the shortfall created by Etana's and Russell's misappropriations. According to Kraken, Etana Custody Ltd commingled custodial funds belonging to different customers without any reliable way of tracking each customer's balance, used those funds to pay operating expenses and bankroll risky investments, and fraudulently concealed the fact that millions of dollars belonging to Kraken and its customers had been depleted or lost.
Russell has disputed Kraken's allegations, but Colorado's Banking Board has already placed Etana Custody Inc in liquidation due to insolvency. The court case is ongoing.