Kraken’s parent company, Payward, has secured a legal victory against auditor Mazars USA, which had abruptly pulled out of a nearly completed audit during the height of Operation Choke Point 2.0 in 2022.
According to a blog post on Tuesday, Payward is asking the Delaware Court of Chancery to enter final judgment on the $22 million that an arbitrator awarded to the company after it sued Mazars for abandoning its audit of Kraken, likely due to political pressure, causing reputational harm.
"An audit is not a favor. It is oxygen. Banking relationships, licenses, counterparties, and regulators all depend on it. When your auditor quits with no findings against you, you inherit a cloud you did nothing to create, and you pay to clear a name that was never dirty. We spent years and millions in legal fees doing exactly that," Payward co-CEO Arjun Sethi wrote in the post.
Operation Choke Point 2.0 is a widely used term to cover the Biden administration’s unofficial pressure campaign against the crypto industry following the collapse of FTX. The term, coined by crypto venture capitalist Nic Carter, references a similar policy during the Obama administration to pressure banks to cut ties with unsavory businesses like arms dealers.
