**By Arjun Sethi, Cofounder and Chairman, Tribe Capital; Co-CEO, Payward, the parent company of Kraken.**

It is hard to put a price on vindication. An arbitrator did. But if this were only about a lawsuit, I would not be writing this letter.

### TL;DR
- **Payward**, **Kraken’s parent company**, asked the **Delaware Court of Chancery** to enter final judgment against **Mazars USA** after winning a **$22 million arbitration award**. Kraken sued Mazars after it withdrew from Kraken’s nearly completed **2022 audit**.
- Mazars’ resignation was part of a broader campaign of **regulatory pressure** and **institutional pressure** against **lawful crypto companies**, **crypto founders**, **developers**, and **customers**.
- Kraken’s fight is part of the industry’s larger purpose: **financial freedom**, **self-custody**, **open markets** and the **right to build without permission**.
- With the machinery of informal pressure being dismantled, Congress must finish the job by passing the **CLARITY Act** and creating durable **digital asset market structure rules** in the **United States**.

### What happened?

**Mazars audited our financial statements for three years.** Two clean opinions. A third audit was nearly complete, and Mazars had told us to expect the same result. In December 2023, days before completion, they quit.

When they withdrew, Mazars confirmed in writing that they had **no disagreement with our management, no concerns about our integrity, and that they had found no fraud.** Read that again. An auditor abandoned a nearly finished audit of a client it had no professional dispute with.

An audit is not a favor. It is oxygen. Banking relationships, licenses, counterparties, and regulators all depend on it. When your auditor quits with no findings against you, you inherit a cloud you did nothing to create, and you pay to clear a name that was never dirty. We spent years and millions in legal fees doing exactly that.

Why did they quit? Mazars pointed to uncertainty and risk from legal developments, including a complaint the SEC had filed against Kraken a few weeks earlier. Auditors handle legal developments through disclosure every day. It is routine. Resignation is not. And that SEC complaint was later **dismissed with prejudice.** No penalties. No admission of wrongdoing. No changes to our business. The case evaporated. The damage from losing our auditor did not.

I will say what I believe plainly: **Mazars was pressured.** In December 2022, a year before quitting our audit, Mazars Group publicly halted its proof-of-reserves work for the entire crypto sector and pulled its reports off its own website. The firm was not walking away from bad clients. It was walking away from an industry that had become politically expensive to serve. We were the collateral damage.

Notably, the problem was not ours. **We have received a clean audit every year since then.**

### The machinery

What happened to us was one instance of a pattern of **coordinated pressure against a disfavored industry.** The record is now public, and it is more widespread than the industry’s critics ever admitted.

On January 3, 2023, the Federal Reserve, FDIC, and OCC issued a joint statement declaring that crypto-related business models raised significant safety and soundness concerns for banks. Remember that date. Behind the scenes, the FDIC sent at least 25 letters to 24 banks instructing them to pause or refrain from expanding crypto-related activity.

Those letters only became public because a research firm sued under the Freedom of Information Act and a federal judge ordered them released. The FDIC’s own press release later admitted that bank requests to serve this industry were, in its words, **almost universally met with resistance.**

The SEC’s accounting staff issued **SAB 121**, which forced any public company custodying crypto to put those assets on its own balance sheet. For banks, that made custody economically impossible. The Federal Reserve denied **Custodia**, a fully reserved Wyoming bank built for digital assets, access to the payment system.

And in nine days in March 2023, the two settlement networks the industry ran on, **Silvergate’s SEN** and **Signature’s Signet**, disappeared. **Barney Frank**, who sat on Signature’s board, said regulators seized the bank to send a message about crypto.

Every piece of that machinery has since been dismantled. SAB 121 was rescinded. The joint statement was withdrawn. Congress held hearings, and the House committee’s final report found that regulators used vague rules and informal pressure to push banks away from lawful digital asset firms.

An executive order now bars debanking over reputation risk, and the Federal Reserve has proposed codifying that permanently. The correction is real. It is also an admission of what happened.

### What it did to people

Companies have lawyers. People mostly just lose.

I was debanked by SVB. I was debanked by First Republic. So were my companies. So were our funds. At a certain point, we were simply asked to leave. There is no hearing when that happens. There is no appeal. There is no explanation you can act on. You are left to wonder what you did wrong, and for thousands of people in this industry, the honest answer was nothing.

Both of those banks later collapsed. Not because of crypto. They collapsed because of bad governance and how they were run. I said so at the time, and I was not alone in seeing it. The institutions that decided we were too risky to bank could not manage their own risk.

At Tribe Capital, I watched portfolio companies that had done nothing wrong lose banking with a phone call. And when Tribe registered as an investment adviser, a routine step for a growing fund, we did not get a routine review. We got a full examination. The SEC asked for every crypto transaction we and our funds had ever made, and every document connected to our crypto investments, including our investment in Kraken. We produced it all.

There was nothing to find, and nothing was found. But understand what that costs a firm in time, in legal fees, and in the quiet signal it sends: this asset class is trouble, and so are the people who touch it.

That signal reached developers who shut down projects. Founders who moved abroad. Employees of lawful companies who could not open checking accounts. None of them will file an arbitration claim. Most of their stories will never be told. That is why I am telling ours.

### Our Founder, Jesse Powell

Kraken exists because **Jesse Powell** built it, starting in 2011, with security as its foundation and financial freedom as its purpose.

When I met Jesse, he was already thinking about transitioning out of the CEO role. That was his plan, made freely, the way a founder should get to make it. Then the war reached him personally.

In March 2023, federal agents raided his home and seized his devices over allegations from dispute with a nonprofit unrelated to Kraken or crypto. The raid, instead, was a completely overblown response to a personal business disagreement.

He led Kraken through the hardest period in its history with that hanging over him. Two years later, the government closed its investigation and returned his devices. **No charges.** It was over for the prosecutors. It is never really over for the person.

What should have been a transition entirely on his terms and his timeline became one shaped by a campaign against him, personally and professionally. He handed the company to **Dave Ripley**, and later trusted me to lead it alongside Dave. I consider it one of the privileges of my life to build beside him.

Jesse made the greatest sacrifice of anyone here so that this company could endure. We owe him a debt the balance sheet will never show. **This win is for him.**

### Why I am here

People ask why I took this job while building Tribe. The answer has not changed since the day I joined the board in 2021. **Money is the most important network humans have built, and it is broken for billions of people.** I wanted to be at the center of fixing it. Fix money and you fix the world.

Here is what that phrase actually means. It means power moves back into the hands of people. Your assets in your custody. Your transactions by your choice. Your financial life is not subject to the quiet veto of an institution that never has to explain itself.

I can think of nothing more American than that. This country was founded by people who refused to accept that distant institutions should control what they could own, build, and become. **Crypto is that same refusal, rendered in code.**

It also means something about how companies like ours must behave. Nobody is forced to use Kraken. Our customers choose us every day, and every day they are free to leave, because the entire point of this technology is that they can. That keeps us honest in a way no regulation ever will.

We are not here to extract money from people. The old system did enough of that. We are here to help people grow their money, their capital, and their independence. When your customer can exit at any moment, service is the only moat. That is exactly how it should be.

Kraken’s mission is accelerating the global adoption of crypto so that everyone can achieve true financial freedom and inclusion. That mission is precisely what made us a target. I would make the same choice again without hesitation.

### The US needs clear rules and federal market regulation. Pass the CLARITY Act.

The House passed the **CLARITY Act** last July, 294 to 134, with 78 Democrats voting yes. This is not a partisan idea. The Senate Banking Committee advanced it in May. Stablecoin legislation already proved this Congress can act on digital assets.

Market structure is the harder and more important half: clear jurisdiction, real registration paths, and protection for the developers who write open-source code. **Software developers should not need an army of lawyers to know whether their code is legal.**

The rest of the world is not waiting. In Europe, **MiCA** was passed in 2022 and created one framework that enshrined uniform market regulation and customer protection across 30 countries, and Kraken was authorized by the Central Bank of Ireland a year ago. As of this month, no license means no EU customers.

That is what regulatory clarity looks like: real rules, really enforced, that serious companies can build on. Most of the G20 has already advanced fundamental legislation and market regulation, and the US remains well behind. Jurisdiction after jurisdiction has decided that the answer to this industry is rules, not pressure. The United States invented the technology of open markets. It should not be the last major economy to write rules for their next form.

None of this is about political party. The principles at stake (the right to hold your own assets, to build without permission, to transact without surveillance as the default) are extensions of the Bill of Rights, rendered in code. They deserved protection when it was hard.

We did not fight Mazars because $22 million changes Kraken’s trajectory. We fought because walking away from us was the easy thing, and letting it slide would have taught every institution watching that abandoning a lawful company that is politically disfavored is free. It is not free. Not anymore.

**Vindication is not the point.** The point is that no founder, no developer, and no customer should ever need to win an arbitration to prove they deserved a bank account, an auditor, and the basic infrastructure of doing business in America.

We won this fight. Now our congressional leaders from both sides of the aisle need to come together to finish the bigger one. **Pass the CLARITY Act.**

It is hard to put a price on vindication. An arbitrator did. But if this were only about a lawsuit, I would not be writing this letter.

Kraken Wins $22M Arbitration: A Story of Vindication and the Fight for Crypto's Future

**Live markets: Bitcoin recoups early decline, rising back above $63,000**

Strategy raised $216 million with the sale of 3,588 bitcoin last week, sending prices lower earlier on Monday.

## Online experts weigh in on Strategy's move

"Strategy now has a completely different business model," wrote **Peter Schiff**, a longtime no-coiner and critic of Michael Saylor and his company. "Instead of selling common and preferred stock and issuing debt to buy bitcoin, the new strategy is to sell bitcoin to pay interest and dividends, pay off debt, buy back shares it sold, and hope that bitcoin’s price goes way up."

"You guys who believed selling 32 BTC caused sell-off three weeks ago have some reflecting to do," said **Grant Cardone**.

"I’m on board with the firm moving in this direction," wrote **Josh Mandell**. "When the usual approach to funding dividends is just selling more shares of common stock, opting to sell a small amount of bitcoin instead essentially behaves like a buyback of the common."

"Strategy just sold ~1.5 months of dividend obligations in one week," said **Joe Burnett**, an executive with fellow bitcoin treasury company, Strive. "At this pace and with 0% BTC appreciation, today’s dividend obligation is funded until 2056 ... At ~3.4% annual BTC appreciation, today’s dividend obligation can be funded indefinitely."

Finally, there's **Strategy CEO Phong Le**: "Strategy is evolving from one-way capital issuance to active capital management."

## Saylor's 'inoculate' strategy might be working

Strategy's sale of just **32 bitcoin** in late May (disclosed in early June) sparked a panic-driven plunge that took BTC from $74,000 to $60,000 in a few days.

Executive Chairman **Michael Saylor** had previously suggested it might be a good idea to "inoculate" the market over the company's intention to possibly fund dividend payments with occasional bitcoin sales.

Markets, however, are responding differently to last week's sale of **3,588 bitcoin** (disclosed Monday morning). After a brief dip as the headline hit, bitcoin has returned to very close to its weekend highs, up 1.7% over the past 24 hours.

## Bitcoin bounces above $63,000 recouping morning loss

The price of bitcoin (BTC) has reversed sizable early Monday losses, returning to $63,400 around the noon hour on the East Coast.

Bitcoin had rallied over the weekend to nearly $64,000, but lost all those gains and more after Strategy (MSTR) reported the sale of more than 3,000 BTC last week.

Buyers returned mid-morning, though, perhaps buoyed by the idea that Strategy may not have to sell a lot more of its stack, or maybe an offhand comment by President Trump that bitcoin might be a worthy addition to Trump Accounts.

## Strategy booked an $8.3 billion bitcoin loss in second quarter

Included in this morning's SEC filing regarding bitcoin sales, Strategy (MSTR) disclosed an **$8.32 billion loss** on digital assets during the three months ended June 30.

Bitcoin started the second quarter at around $68,000 and ended it at roughly $60,000.

## Nine months since bitcoin's all time high

Exactly nine months ago, on Oct. 6, Bitcoin reached its all time high of around **$126,000**. It now trades near $62,500, a roughly **50 percent correction**, after falling as low as $57,800.

If the four year cycle continues to hold, a historical pattern in which Bitcoin has tended to move through approximately four year periods of bull markets, bear markets, and recoveries, then the cycle bottom may still be months away, potentially around October.

Strategy raised $216 milliion with the sale of 3,588 bitcoin last week, sending prices lower earlier on Monday.

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