Kraken sues crypto derivatives firm PowerTrade over 'misappropriated' funds claim

Payward, the parent company of cryptocurrency exchange Kraken, has taken legal action against PowerTrade, a high-leverage derivatives platform based in the U.A.E., claiming the firm’s founders misappropriated $7.2 million of Kraken’s digital assets and unrealized gains.

"PowerTrade and its co-founders misappropriated $7.2 million of Payward’s digital assets and unrealized gains. Payward’s legal proceedings seek the return of those funds," a Kraken spokesperson said in an emailed statement to CoinDesk.

As such, Payward filed an application with a U.S. federal court seeking discovery from various U.S.-based financial institutions regarding PowerTrade and its co-founders to aid legal proceedings against them, according to a Thursday filing.

The lawsuit claims that PowerTrade improperly stripped more than $6 million from Payward’s PowerTrade account through a series of unilateral and unauthorized transactions.

These transactions included retroactively canceling Payward’s profitable trades that had closed or settled months earlier as part of an effort to manufacture a negative balance in Payward’s trading account and abscond with Payward’s collateral, the filing alleged.

“We have already obtained an interim worldwide freezing order from the DIFC [Dubai International Financial Centre] Courts against PowerTrade and its co-founders and have commenced other legal proceedings in other jurisdictions,” the Kraken spokesperson said.

“The discovery we seek will help Payward identify additional assets to freeze and ensure that bad actors like PowerTrade are not able to harm others in the industry,” Kraken added.

In 2022, Kraken began institutional cryptocurrency derivatives trading on PowerTrade, a company operated out of El Salvador and co-founded by CEO Mario Gomez Lozada and CFO Bernd Sischka.

In October 2025, when the price of bitcoin fell and markets declined, Kraken said it became concerned about PowerTrade’s liquidity and creditworthiness and tried to withdraw its funds, but was unable to, according to the filing.

Rather than returning the funds, the lawsuit claims that PowerTrade carried out a series of unauthorized transactions that moved Kraken’s account from holding more than $6 million to a negative balance of nearly $2 million.

This was done through a block of around 100 “corrections,” related to trades that had expired or settled months earlier, the filing said. Payward said in the filing that it was concerned that PowerTrade would rely on the “debt” it had artificially created to appropriate Payward’s bitcoin collateral.

PowerTrade did not respond to a request for comment by press time.