Kraken parent sues Etana, accuses CEO of $25M fraud
Payward sued Etana Custody and CEO Dion Brandon Russell, alleging a scheme that misappropriated more than $25 million in Kraken customer reserve funds, the filing says.
Payward, the parent company of crypto exchange Kraken, filed a second amended complaint on May 4, 2026 in the U.S. District Court for the District of Colorado against Etana Custody and its CEO, Dion Brandon Russell. The complaint alleges the misappropriation of more than $25 million in Kraken customer reserve funds.
The filing upgrades earlier contract claims into detailed allegations of fraud and civil theft. It states Etana commingled Kraken’s reserve assets with company funds and diverted at least $16 million into notes issued by Seabury Trade Capital that later defaulted. The complaint alleges Russell personally directed the transfers while Etana’s account dashboards continued to show customer balances as fully secure.
According to the complaint, Kraken sought to withdraw roughly $25 million from Etana in April 2025. Etana delayed payment and cited reconciliation issues that the filing describes as fabricated. The complaint says Etana lacked liquidity to return customer funds and used incoming deposits to cover prior shortfalls, a pattern the filing characterizes as Ponzi-like.
Etana entered statutory liquidation in November 2025 after Colorado regulators issued cease-and-desist and suspension orders. A court-appointed receiver now oversees Etana’s estate and reported about $6.83 million in cash on hand against liabilities exceeding $26 million, most of which represents Payward’s claim. The receiver is producing documents and making former Etana staff available to Payward’s legal team.
The filing notes that some crypto holdings were briefly inaccessible after Amazon Web Services terminated an Etana account in March 2026 for unpaid fees. The federal case is stayed against Etana entities while Payward pursues claims against Russell individually. The complaint seeks to hold him personally liable for fraud and civil theft and requests damages and equitable relief tied to the alleged diversion of customer reserves.
The filing states that with the receiver opting not to mount a vigorous defense, Payward’s recovery will depend on the claims process in liquidation and any applicable insurance proceeds.
