Kraken Parent Accuses Etana CEO of $25M Ponzi Scheme

Payward, the parent company of crypto exchange Kraken, filed a second amended complaint on May 4, 2026, in U.S. District Court for the District of Colorado alleging Etana Custody and its CEO, Dion Brandon Russell, ran a Ponzi-like scheme that misappropriated more than $25 million in customer reserve funds.

The complaint expands earlier breach-of-contract claims into detailed fraud allegations. It states Etana commingled Kraken’s reserve assets with company funds and directed at least $16 million into notes issued by Seabury Trade Capital that later defaulted. Payward contends Russell personally directed the misuse while Etana’s custody dashboard showed balances as fully secure.

Kraken requested roughly $25 million in withdrawals in April 2025, the filing says. Etana delayed the transfer by citing reconciliation issues that Payward describes as fabricated. The complaint asserts Etana lacked sufficient liquidity to return the funds and used incoming deposits to cover prior shortfalls, a pattern Payward characterizes as Ponzi-like.

Etana entered statutory liquidation in November 2025 after Colorado regulators issued cease-and-desist and suspension orders. The court-appointed receiver reports cash holdings of about $6.83 million and liabilities exceeding $26 million, with the majority of liabilities tied to Payward’s claim. The receiver has produced documents and made former Etana staff available for questioning.

The complaint also notes some crypto assets held by Etana were stored on Amazon Web Services and were briefly inaccessible after AWS terminated the account in March 2026 for unpaid fees. The federal case is stayed against Etana entities but continues against Russell, who faces personal claims for fraud and civil theft.

Payward seeks to hold Russell personally liable and to recover funds for Kraken customers whose reserves were entrusted to Etana Custody. Payward’s potential recovery will depend on the claims process in the liquidation and any available insurance proceeds, according to the complaint.