The FBI searched the home of Jesse Powell, a cryptocurrency executive who claims he hacked and cyberstalked a nonprofit, in March, said three people with knowledge of the matter.
The people said the investigation centered on an allegation by the nonprofit that Mr. Powell, who also founded cryptocurrency exchange Kraken, had interfered with its computer accounts, blocking access to email and other messages. Three people with knowledge of the matter said agents from the FBI and the US attorney’s office for the Northern District of California have been looking for Powell since at least last autumn.
agents searched mr powell Home More electronic devices were seized in the Brentwood neighborhood of Los Angeles, according to a person familiar with the search and documents reviewed by The New York Times. Prosecutors have not charged Mr. Powell with any crime.
Mr Powell’s lawyer, Brandon Fox, confirmed he was being investigated by federal prosecutors in northern California. Mr. Fox said the investigation focused on allegations by the arts group, the Verge Center for the Arts, and was “in no way related to Mr. Powell’s employment or his conduct in the cryptocurrency sector.” He also said Mr. Powell “did nothing wrong.”
A Kraken spokesperson said the Verge investigation has nothing to do with the company, and that Kraken had no reason to believe prosecutors were probing other potential issues.
An FBI representative declined to comment. A spokeswoman for the US Attorney’s Office for the Northern District of California declined to confirm whether an investigation was ongoing.
In recent months, federal investigators have cracked down on several competitors of Kraken. The founder of the FTX crypto exchange was Sam Bankman-Fried accused of fraud Last year, while Coinbase and Binance, the two largest exchanges, were facing government lawsuits.
A key figure in the early history of crypto, Mr Powell, 42, built Kraken to be the second largest US crypto exchange after Coinbase.
His company has faced legal scrutiny for years. Two people familiar with the investigation said that in recent months, prosecutors have been examining allegations against Kraken and Mr. Powell that were made in a wrongful termination lawsuit filed against the company in 2019. In that lawsuit, a former Kraken employee accused the company of earning revenue from accounts in countries that were under US sanctions, and claimed that millions of dollars of customer deposits were missing from Kraken’s bank accounts. .
The lawsuit was settled in 2021, when a judge rejected the employee’s claim that her dismissal was related to the sanctions issue.
Last year, Kraken paid a $360,000 fine to settle treasury department It is alleged to have violated sanctions by allowing users to trade digital currencies in Iran. In February, Kraken paid $30 million fine to the Securities and Exchange Commission for offering an investment product that the agency said violated securities laws.
Mr. Powell founded the Sacramento arts group, The Verge, in 2007. Last year, the group removed him from its board of directors, citing his failure to attend board meetings and violations of the organization’s “guiding principles,” according to court records. eviction followed by article in The Times Powell’s efforts to stir up debate about race and gender, which some Kraken employees found objectionable.
Following Mr. Powell’s dismissal, he blocked Verge from using its website, email and internal messaging system, and improperly accessed confidential information stored in those accounts, Verge lawyer Philip Cunningham told Kraken in November. Was sent to The letter was reviewed by the Times.
Last month, Mr. Powell sued The Verge in state court in Sacramento, claiming that his removal was unfair and that he was the owner of the Verge’s digital accounts. Mr. Cunningham, a lawyer for The Verge, said there was no merit to Mr. Powell’s claims.
In September, Mr. Powell announced he will quit as Chief Executive Officer of Kraken while serving as Chairman. He was replaced by Dave Ripley, Kraken’s chief operating officer, who took over the firm in March.
Kirsten Noyce and Kitty Bennett contributed research.