The Coming Clean star parted ways with the company earlier this week, prompting speculation that she had broken the strict conditions of the deal forbidding her from using cocaine.
However, Katona adamantly denied the suggestions on Twitter and claimed that it had been her choice to move on after feeling that her "integrity had been compromised".
"Contrary to recent press reports, I was not 'dumped' by CAN Associates," she wrote. "It was my decision to leave, as on a professional level my career was taking a direction that I did not want, nor did I feel was appropriate.
'Furthermore on a personal level, I felt that my integrity had been compromised, as it was with Nicola Partridge before me.
"I have not taken any drugs in the last year and a half - and if anyone claims otherwise, I will sue without hesitation."
It had previously been claimed that Katona was dropped after snubbing fellow CAN client Amy Childs's birthday this week, but this was swiftly denied by the agency.
"We rescued Kerry from obscurity a year ago. We have spent a lot of money cleaning up her image. We have given her a whole new image, new clothes, a new life and she has blown it all, " an alleged CAN source previously told the Daily Star.
Powell stated last year that the signing represented Katona's "last chance" at success.
Watch Digital Spy's interview with Kerry Katona from March 2011 below: