The FBI has wrapped up its investigation into Jesse Powell, the former CEO of the popular crypto exchange Kraken, which was sparked by a conflict with the Verge art center.
The Department of Justice has directed the FBI to hand back all the tech gadgets taken from Powell’s Brentwood home in Los Angeles, according to documents obtained by Fortune.
This whole ordeal began when Verge accused Powell of unlawfully tampering with its digital accounts. He co-founded Verge Center for the Arts back in 2007 in Sacramento.
Proving The Accusations False
Back in July 2023, The New York Times reported that the FBI was looking into the claims against Powell, alleging that he disrupted Verge’s communication systems and even stalked their members over the internet.
Since at least the fall of 2021, investigators from the FBI and U.S. Attorney’s Office for California’s Northern District had been digging into these allegations. Powell’s attorney, Brandon Fox, made clear that these claims had nothing to do with Powell’s position or behavior in the crypto sector.
In light of the DOJ’s decision to abandon the investigation, Fox shared that they received a “declination letter” indicating the end of the case.
“We pursued this letter to help repair the harm to Jesse’s reputation and the operation of Kraken in such a tightly regulated industry,” Fox noted in his comments to the press.
Throughout the investigation, Powell has consistently denied the charges, also thinking of filing a civil suit in 2024 in California, highlighting what he described as a power push by Verge’s board members.
“I didn’t hack or stalk anyone, nor shut off access to any accounts,” Powell stated in his legal submissions. “Verge’s leadership colluded to oust me from the board and set up a new domain name with new accounts beforehand.”
He claims that the seized devices contain correspondence and records from Verge that support his side of the story.
“The FBI’s search of my home impacted both my personal and professional life harshly. It’s hard to believe that the raid was based on such unfounded claims from the Verge,” Powell expressed. “I always felt I hadn’t done anything wrong, and the evidence in my defamation suit against Verge proves just that,” he shared with NYT.
Court filings show that Powell has sued two Verge board members for failing to provide necessary documents during the legal discovery phase. One of them, Phil Cunningham, linked with Verge’s legal counsel, had accused Powell of misconduct to Kraken.
Powell’s lawyers allege that Cunningham broke the law by hiding documents that could clear Powell’s name in action such that Verge took against him.
Powell’s legal team asserts that the public nature of the investigation seriously damaged their client’s reputation.
Challenges for Kraken with Law Enforcement
While Powell has been cleared of Verge’s claims, his exchange, Kraken, has faced multiple fines from U.S. financial agencies over regulatory breaches.
This year, Kraken was hit with a $360,000 penalty in a deal with the Treasury Department due to violations of U.S. sanctions that permitted transactions from Iran. More recently, in February 2024, the SEC snatched $30 million related to unregistered securities linked to one of its investment offerings.
In other news, Kraken has decided to partner with Windtree Therapeutics, a company listed on Nasdaq, to assist with their BNB-based crypto treasury management, as stated in a recent announcement.
With this collaboration, Kraken will oversee custody, facilitate trades, and manage OTC execution of Windtree’s BNB assets.
