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.