The founder of a cryptocurrency exchange had their residence investigated by the FBI

The founder of a cryptocurrency exchange had their residence investigated by the FBI

In March, the home of Jesse Powell, the founder of the cryptocurrency exchange Kraken, was searched by the FBI as part of an investigation into allegations of hacking and cyber-stalking against a nonprofit arts group that Powell had founded. The investigation centered around claims made by the nonprofit, Verge Center for the Arts, that Powell had interfered with their computer accounts, blocking access to emails and other messages. The FBI and the U.S. attorney’s office for the Northern District of California had been looking into Powell since at least the previous fall. Electronic devices were seized during the search of Powell’s Los Angeles home, but he has not been charged with any crimes.

Powell’s lawyer confirmed that he is under investigation by federal prosecutors in Northern California, but emphasized that the focus of the investigation is solely on the allegations made by the arts group and not related to Powell’s employment or conduct in the cryptocurrency industry. A spokesperson for Kraken stated that the Verge investigation is unrelated to the company, and they have no reason to believe that prosecutors are investigating any other issues.

The crackdown on cryptocurrency exchanges by federal investigators has been ongoing, with charges of fraud against the founder of FTX crypto exchange and government lawsuits against Coinbase and Binance. Powell, a prominent figure in the early history of cryptocurrency, built Kraken into the second-largest crypto exchange in the United States. The company has faced legal scrutiny over the years, including allegations made in a wrongful termination lawsuit in 2019, which accused Kraken of earning revenue from sanctioned countries and having missing customer deposits. The lawsuit was settled in 2021, with the employee’s claim related to sanctions being dismissed.

In addition to the Verge investigation, prosecutors have examined allegations against Kraken and Powell that arose from the wrongful termination lawsuit. Kraken has previously faced penalties, including a $360,000 fine for violating sanctions and a $30 million fine for violating securities laws. Powell founded Verge in 2007 but was removed from its board of directors in the previous year due to his absence from board meetings and violations of the organization’s principles. After his dismissal, Powell blocked Verge from using its website, emails, and internal messaging system, allegedly accessing confidential information. Powell later sued Verge, claiming his removal was improper and asserting ownership of Verge’s digital accounts.

In September, Powell announced that he would step down as Kraken’s chief executive while remaining chairman. Dave Ripley, the company’s chief operating officer, took over as CEO in March.