Payward, the parent company of cryptocurrency exchange Kraken, has taken legal action against PowerTrade, a high-leverage derivatives platform based in the United Arab Emirates, alleging that the company’s founders misappropriated $7.2 million of Kraken’s digital assets and unrealized profits.
“PowerTrade and its co-founders misappropriated $7.2 million of Payward’s digital assets and unrealized profits. Payward’s legal proceedings seek the return of those funds,” a Kraken spokesperson said in a statement emailed to CoinDesk.
As such, Payward filed a request in U.S. federal court seeking discovery from several U.S.-based financial institutions regarding PowerTrade and its co-founders to assist in legal proceedings against them, according to a document filed Thursday.
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 the retroactive cancellation of profitable Payward trades that had been closed or liquidated months earlier as part of an effort to create a negative balance in Payward’s merchant account and abscond with Payward’s collateral, the filing alleges.
“We have already obtained a provisional global freezing order from the DIFC [Dubai International Financial Centre] Courts against PowerTrade and its co-founders and have initiated other legal proceedings in other jurisdictions,” the Kraken spokesperson said.
