Payward, the parent company of cryptocurrency exchange Kraken, has taken legal action against PowerTrade, a highly leveraged derivatives platform based in the United Arab Emirates, alleging that 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 lawsuits seek to recover these funds,” a Kraken spokesperson said in an emailed statement to CoinDesk.
As such, Payward filed an application in U.S. federal court seeking discovery from various U.S.-based financial institutions regarding PowerTrade and its co-founders to aid litigation against them, according to a Thursday filing.
The lawsuit alleges that PowerTrade improperly removed more than $6 million from Payward’s PowerTrade account through a series of unilateral and unauthorized transactions.
Those transactions included retroactively canceling Payward’s profitable trades that had been closed or liquidated months earlier in an attempt to create a negative balance in Payward’s trading account and disappear with Payward’s collateral, the filing claims.
“We have already obtained a temporary worldwide freezing order from the DIFC [Dubai International Financial Centre] Courts against PowerTrade and its co-founders and has initiated other legal proceedings in other jurisdictions,” the Kraken spokesperson said.
