In March, the FBI hacked and cyberstalked a nonprofit founded by crypto industry executive Jesse Powell, according to three people familiar with the matter. searched his house.
The investigation will focus on the nonprofit’s allegations that Powell, who is also the founder of crypto exchange Kraken, interfered with the nonprofit’s computer accounts, blocking access to emails and other messages. It is said that he guessed Investigators with the FBI and the U.S. Attorney’s Office for the Northern District of California have been investigating Powell since at least last fall, according to three people familiar with the case.
Investigators searched Mr. Powell’s home. House A suspect was arrested in the Brentwood neighborhood of Los Angeles and electronic devices were seized, according to people familiar with the investigation and documents reviewed by The New York Times. Prosecutors have not accused Mr. Powell of any crime.
Mr. Powell’s attorney, Brandon Fox, confirmed that Mr. Powell is under investigation by federal prosecutors in Northern California. Fox said the investigation focused on allegations made by the Verge Center for the Arts, which “has nothing to do with Mr. Powell’s employment or his conduct in the cryptocurrency space.” “He did nothing wrong,” Powell said.
A Kraken spokeswoman said the Verge investigation had nothing to do with the company and had no reason for Kraken to believe prosecutors were investigating other potential issues.
An FBI representative declined to comment. A spokesman for the U.S. Attorney’s Office for the Northern District of California declined to confirm whether an investigation was ongoing.
In recent months, federal law enforcement agencies have cracked down on several of Kraken’s competitors. Crypto exchange FTX founder Sam Bankman-Fried was indicted on fraud charges last year, while two of the biggest exchanges, Coinbase and Binance, face government lawsuits.
A key figure in the early history of cryptocurrency, Powell, 42, built Kraken into the second largest cryptocurrency exchange in the United States after Coinbase.
His company has been under legal scrutiny for years. Prosecutors have spent recent months investigating allegations against Kraken and Powell in a wrongful termination lawsuit filed against the company in 2019, according to two people familiar with the investigation. In the lawsuit, a former Kraken employee accused the company of earning money from accounts in countries under U.S. sanctions, claiming that Kraken’s bank accounts were missing millions of dollars in customer deposits. bottom.
The lawsuit was settled in 2021 after a judge dismissed the employee’s claim that the employee’s dismissal was related to sanctions issues.
Last year, Kraken paid a $360,000 fine to settle a Treasury Department charge that it violated sanctions by allowing Iranian users to trade digital currencies. Kraken in February $30 million fine The Securities and Exchange Commission has filed charges with the Securities and Exchange Commission for offering investment products that violate securities laws.
In 2007, Powell founded the Sacramento arts group The Verge. The group removed him from its board last year, citing his absence from the board and violations of the group’s “guiding principles,” according to court records. The removal follows an article in The Times detailing Powell’s efforts to spur debate about race and gender that some Kraken employees found offensive.
According to a letter sent to Kraken in November by Mr. Verge’s lawyer, Philip Cunningham, after Mr. Powell’s dismissal, Mr. Powell blocked the use of Verge’s website, email and internal messaging system, and they You improperly accessed sensitive information stored in your account. This letter was confirmed by The Times.
Mr. Powell last month sued Mr. Verge in state court in Sacramento, claiming that Mr. Verge’s ban was unjust and that he owned Mr. Verge’s digital accounts. Mr. Verge’s lawyer, Mr. Cunningham, said Mr. Powell’s allegations had no basis.
In September, Mr. Powell announced that he would step down as chief executive while keeping his role as Kraken’s chairman. He will be replaced by Kraken Chief Operating Officer Dave Ripley, who took over the company in March.
Kirsten Noise and Kitty Bennett contributed to the research.
