Kraken Founder Jesse Powell Cleared as US Justice Department Drops Criminal Probe

Breaking: Crypto industry heavyweight Jesse Powell just dodged a legal bullet—the DOJ quietly closed its investigation into the Kraken co-founder. No charges, no drama, just another day in the Wild West of digital assets.

Behind the scenes: While Powell walks free, regulators keep playing whack-a-mole with crypto execs. Guess even the feds can't find real crimes when the 'crime' is building disruptive financial infrastructure.

Market shrugs: No jail time for founders? Must be Tuesday. Meanwhile, Wall Street bankers still get golden parachutes after burning billions—but sure, crypto's the 'risky' bet.

Powell proves Verge’s accusations were false 

In July 2023, The New York Times published a report that confirmed the FBI was investigating the 45-year-old Kraken founder. At the time, he was accused of interfering with the nonprofit’s communications systems and stalking members of the group through their digital footprint. 

Investigators from the FBI and the US Attorney’s Office for the Northern District of California had been looking into the matter since at least fall 2021. Powell’s lawyer, Brandon Fox, confirmed the allegations were “in no way related to Mr. Powell’s employment or his conduct in the crypto business.”

In response to the government’s dropped investigations this week, Fox said the Department of Justice sent them a “declination letter” stating the case was now closed. 

“We sought the letter to help offset the damage done to Jesse’s reputation and to Kraken’s operations in a highly regulated industry,” Fox told reporters.

Powell has been denying the accusations both in court and in the press, and even filed a civil lawsuit in 2024 at the California state court, in which he propounded that Verge board members were conducting a power grab.

“I did not hack or stalk anyone, or cut off access to the accounts,” Powell wrote in the court filing. “Verge executives conspired to remove me from the board, and quietly put in place a new domain name and created new workplace accounts before doing so.”

According to Powell, the devices seized by the FBI have messages and internal memos from Verge that corroborate his statements.

“The FBI’s raid on my house was devastating both personally and professionally. It is still shocking that the raid was premised on Verge Center for the Arts’ baseless accusations against me. I knew that I had done nothing wrong, and discovery in my defamation case against Verge has shown this is undeniable,” he told NYT.

Per court filings, Powell sued two members of Verge’s board for failing to turn over documents during the discovery process. One of them is Phil Cunningham, the nonprofit’s legal counsel, who wrote to Kraken about the former CEO’s “misconduct” in the Verge.

His attorneys argue that Cunningham broke the law by withholding documents in the organization’s case against Powell, which could exonerate the latter.

According to Powell’s attorneys, the public revelation of the case caused reputational harm to the American entrepreneur.

Kraken’s rough relationship with law enforcement

The 45-year-old crypto businessman was cleared of the Verge’s accusations, but Kraken has been fined severally by US financial authorities for breaking regulatory laws.

In 2023, Kraken paid a $360,000 fine in a settlement with the Treasury Department for violating US sanctions and allowing users in Iran to conduct crypto transactions. Then, in February 2024, the Securities and Exchange Commission (SEC) fined the exchange $30 million over an investment product the agency found to be unregistered securities.

Meanwhile, Nasdaq-listed biotech company Windtree Therapeutics has formed a partnership with the exchange to oversee its BNB-based crypto treasury operations, the two firms announced on Tuesday.

Under the agreement, Kraken will provide custody services, facilitate trading, and handle over-the-counter (OTC) execution of Windtree’s BNB holdings.

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