The F.B.I. searched the house of the cryptocurrency government 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 individuals with information of the matter stated.
The investigation centered on an allegation by the nonprofit that Mr. Powell, who additionally based the cryptocurrency trade Kraken, had interfered with its laptop accounts, blocking entry to emails and different messages, the individuals stated. Brokers with the F.B.I. and the U.S. legal professional’s workplace for the Northern District of California have been trying into Mr. Powell since a minimum of final fall, three individuals with information of the case stated.
Brokers searched Mr. Powell’s residence within the Brentwood neighborhood of Los Angeles and seized digital gadgets, based on an individual acquainted with the search and paperwork reviewed by The New York Instances. Prosecutors haven’t accused Mr. Powell of any crimes.
Brandon Fox, a lawyer for Mr. Powell, confirmed that he was underneath investigation by federal prosecutors in Northern California. Mr. Fox stated the investigation was centered on the allegations by the humanities group, Verge Middle for the Arts, and “by no means associated to Mr. Powell’s employment or his conduct within the cryptocurrency area.” He additionally stated Mr. Powell “did nothing fallacious.”
A Kraken spokeswoman stated the Verge investigation had nothing to do with the corporate, and that Kraken had no motive to consider that prosecutors have been investigating different potential points.
An F.B.I. consultant declined to remark. A spokesman for the U.S. legal professional’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 rivals. Sam Bankman-Fried, the founding father of the FTX crypto trade, was charged with fraud final yr, 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 trade behind Coinbase.
His firm has confronted years of authorized scrutiny. In latest months, prosecutors have examined allegations in opposition to Kraken and Mr. Powell that have been made in a wrongful termination lawsuit filed in opposition to the corporate in 2019, two individuals acquainted with the probe stated. In that lawsuit, a former Kraken worker accused the agency of incomes income from accounts in international locations that have been underneath U.S. sanctions, and claimed Kraken’s financial institution accounts have been lacking tens of millions of {dollars} of buyer deposits.
The swimsuit was settled in 2021, after a decide dismissed the worker’s declare that his firing was associated to the sanctions situation.
Final yr, Kraken paid a $360,000 effective to settle Treasury Division expenses 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 stated violated securities legal guidelines.
Mr. Powell based Verge, the Sacramento arts group, in 2007. Final yr, 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 courtroom data. The elimination passed off after an article in The Instances detailed Mr. Powell’s efforts to incite debates about race and gender that some Kraken workers discovered offensive.
After Mr. Powell’s dismissal, he blocked Verge from utilizing its web site, emails and inner messaging system, and improperly accessed confidential data 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 Instances.
Final month, Mr. Powell sued Verge in state courtroom in Sacramento, claiming his ouster was improper and that he owned Verge’s digital accounts. Mr. Cunningham, Verge’s lawyer, stated Mr. Powell’s claims didn’t have any benefit.
In September, Mr. Powell introduced he would step down as Kraken’s chief government 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.
