The F.B.I. searched the house of the cryptocurrency govt Jesse Powell in March as a part of a prison investigation into claims that he hacked and cyber-stalked a nonprofit that he based, three folks with information of the matter mentioned.
The investigation centered on an allegation by the nonprofit that Mr. Powell, who additionally based the cryptocurrency change Kraken, had interfered with its laptop accounts, blocking entry to emails and different messages, the folks mentioned. Brokers with the F.B.I. and the U.S. lawyer’s workplace for the Northern District of California have been trying into Mr. Powell since no less than final fall, three folks with information of the case mentioned.
Brokers searched Mr. Powell’s dwelling within the Brentwood neighborhood of Los Angeles and seized digital units, based on an individual conversant in the search and paperwork reviewed by The New York Occasions. Prosecutors haven’t accused Mr. Powell of any crimes.
Brandon Fox, a lawyer for Mr. Powell, confirmed that he was beneath investigation by federal prosecutors in Northern California. Mr. Fox mentioned the investigation was centered on the allegations by the humanities group, Verge Middle for the Arts, and “under no circumstances associated to Mr. Powell’s employment or his conduct within the cryptocurrency enviornment.” He additionally mentioned Mr. Powell “did nothing incorrect.”
A Kraken spokeswoman mentioned the Verge investigation had nothing to do with the corporate, and that Kraken had no cause to imagine that prosecutors have been investigating different potential points.
An F.B.I. consultant declined to remark. A spokesman for the U.S. lawyer’s workplace for the Northern District of California declined to substantiate whether or not an investigation was underway.
In latest months, federal investigators have cracked down on a number of of Kraken’s opponents. Sam Bankman-Fried, the founding father of the FTX crypto change, was charged with fraud final 12 months, whereas Coinbase and Binance, two of the most important exchanges, face authorities lawsuits.
A key determine within the early historical past of crypto, Mr. Powell, 42, constructed Kraken into the second-largest U.S. crypto change behind Coinbase.
His firm has confronted years of authorized scrutiny. In latest months, prosecutors have examined allegations towards Kraken and Mr. Powell that have been made in a wrongful termination lawsuit filed towards the corporate in 2019, two folks conversant in the probe mentioned. In that lawsuit, a former Kraken worker accused the agency of incomes income from accounts in international locations that have been beneath U.S. sanctions, and claimed Kraken’s financial institution accounts have been lacking thousands and thousands of {dollars} of buyer deposits.
The swimsuit was settled in 2021, after a choose dismissed the worker’s declare that his firing was associated to the sanctions difficulty.
Final 12 months, Kraken paid a $360,000 effective to settle Treasury Division prices that it violated sanctions by permitting customers in Iran to commerce digital currencies. In February, Kraken paid a $30 million effective to the Securities and Alternate Fee for providing an funding product that the company mentioned violated securities legal guidelines.
Mr. Powell based Verge, the Sacramento arts group, in 2007. Final 12 months, the group eliminated him from its board of administrators, citing his failure to attend board conferences and violations of the group’s “guiding ideas,” based on court docket information. The elimination occurred after an article in The Occasions detailed Mr. Powell’s efforts to incite debates about race and gender that some Kraken staff discovered offensive.
After Mr. Powell’s dismissal, he blocked Verge from utilizing its web site, emails and inner messaging system, and improperly accessed confidential info saved in these accounts, based on a letter that Verge’s lawyer, Phillip Cunningham, despatched to Kraken in November. The letter was reviewed by The Occasions.
Final month, Mr. Powell sued Verge in state court docket in Sacramento, claiming his ouster was improper and that he owned Verge’s digital accounts. Mr. Cunningham, Verge’s lawyer, mentioned Mr. Powell’s claims didn’t have any advantage.
In September, Mr. Powell introduced he would step down as Kraken’s chief govt whereas remaining chairman. He was changed by Dave Ripley, Kraken’s chief working officer, who took over the agency in March.
Kirsten Noyes and Kitty Bennett contributed analysis.
