Federal Investigation Targets Kraken Co-Founder Over Hacking Allegations

Jesse Powell, co-founder of the crypto exchange Kraken, has come under the scrutiny of federal law enforcement. Allegations of hacking and cyberstalking targeted at Verge Center for the Arts, a non-profit Powell helped found, have been raised, sparking an official investigation. As reported by The New York Times, Powell is accused of obstructing the non-profit’s computer accounts, blocking access to emails and other vital communications.

The New York Times’ account, corroborated by three anonymous sources, revealed the FBI’s extensive actions. Powell’s home in Brentwood, a plush neighborhood on Los Angeles’ Westside, was searched and electronic devices seized. Additionally, the law enforcement teams from the FBI and the U.S. attorney’s office for the Northern District of California have reportedly been investigating Powell since the fall.

Reactions and Legal Repercussions

Amid these revelations, it’s noteworthy that Powell has not yet been charged with any crimes. Brandon Fox, Powell’s lawyer from Jenner & Block, said that Verge’s complaints were one-sided and did not paint the full picture, emphasizing that Powell “did nothing wrong.” Fox further clarified that these issues are entirely separate from Powell’s role and behavior in the cryptocurrency domain.

In a countersuit last month, Powell brought charges against Verge in California Superior Court, arguing that he has legitimate access to the contentious email accounts as a standing board member. Verge’s legal counsel dismissed these claims, as reported by The Times.

Verge, a Sacramento-based organization that Powell co-founded in 2007, ousted him from its board in 2022. They cited a violation of the institution’s “guiding principles” as the cause.

Kraken, the crypto exchange where co-founder Powell serves as chairman after he stepped down as CEO in September of last year, expressed its awareness of the ongoing civil dispute, investigation, and search warrants. A spokesperson clarified that neither Kraken nor Powell’s association with the exchange was involved in the investigation, according to advice from the US Attorney.