The FBI searched the house of Krakens Jesse Powell

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The FBI searched the home of cryptocurrency executive Jesse Powell in March as part of a criminal investigation into allegations that he hacked into and cyber-stalked a nonprofit he founded, reports said three people familiar with the matter.

The investigation focused on an allegation by the non-profit that Mr Powell, who also founded cryptocurrency exchange Kraken, interfered with his computer accounts, blocking access to e -emails and other messages, the people said. Agents from the FBI and the US Attorney’s Office for the Northern District of California have been investigating Mr. Powell since at least last fall, three people with knowledge of the matter said.

Officers searched Mr. Powell’s home in the Brentwood neighborhood of Los Angeles and seized electronic devices, according to a person familiar with the search and the documents reviewed by The New York Times. Prosecutors have not charged Mr. Powell with any crime.

Brandon Fox, an attorney for Mr Powell, confirmed he was being investigated by federal prosecutors in northern California. Mr. Fox said the investigation focused on allegations by the arts group, Verge Center for the Arts, and was in no way related to Mr. Powells’ employment or conduct in the crypto space. -cash. He also said Mr Powell had done nothing wrong.

A spokeswoman for Kraken said the investigation into Verge had nothing to do with the company and Kraken had no reason to believe prosecutors were investigating any other potential issues.

An FBI representative declined to comment. A spokesperson 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 investigators have cracked down on several Krakens competitors. Sam Bankman-Fried, the founder of crypto exchange FTX, was charged with fraud last year, while Coinbase and Binance, two of the biggest exchanges, face government lawsuits.

A key figure in the early days of crypto, Mr. Powell, 42, made Kraken the second-largest U.S. crypto exchange behind Coinbase.

His company has faced years of judicial scrutiny. Over the past few months, prosecutors have been looking into allegations against Kraken and Mr. Powell that were made as part of a wrongful termination lawsuit brought against the company in 2019, two people familiar with the investigation said. . In that lawsuit, a former Kraken employee accused the company of deriving income from accounts located in countries under US sanctions and claimed that Kraken’s bank accounts were missing millions of dollars in customer deposits.

The lawsuit was settled in 2021, after a judge rejected the employees’ claim that his dismissal was related to the penalty issue.

Last year, Kraken paid a $360,000 fine to settle Treasury Department charges that it violated sanctions by allowing users in Iran to trade digital currencies. In February, Kraken paid a $30 million fine to the Securities and Exchange Commission for offering an investment product that the agency said violated securities laws.

Mr. Powell founded Verge, the Sacramento arts group, in 2007. Last year, the group removed him from its board of directors, citing his inability to attend board meetings and violations of the company’s guiding principles. organization, according to court records. The takedown came after a Times article detailed Mr Powell’s efforts to stir up debates about race and gender that some Kraken employees found offensive.

After Mr. Powells was fired, he blocked Verge from using his website, emails and internal messaging system, and improperly accessed confidential information stored in those accounts, according to a letter the company said. Verges’ lawyer, Phillip Cunningham, sent to Kraken in November. The letter was reviewed by The Times.

Last month, Mr. Powell sued Verge in Sacramento state court, claiming his ouster was improper and that he owned Verges digital accounts. Mr Cunningham, a lawyer for Verges, said Mr Powell’s claims had no basis.

In September, Mr. Powell announced that he would step down as chief executive of Krakens while remaining chairman. He was replaced by Dave Ripley, chief operating officer of Krakens, who took over the company in March.

Kirsten Noyes and Kitty Bennett contributed research.

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