DOJ Drops Criminal Probe Into Kraken Founder Jesse Powell – What Really Happened?
- Why Was Jesse Powell Under Federal Investigation?
- How Did Powell Clear His Name?
- What's the Backstory With Verge Center?
- How Does This Affect Kraken's Regulatory Troubles?
- What's Next for Jesse Powell?
- Frequently Asked Questions
In a dramatic turn of events, the US Department of Justice has closed its high-profile investigation into Jesse Powell, the controversial founder of cryptocurrency exchange Kraken. The case stemmed from allegations that Powell hacked accounts belonging to Verge Center for the Arts, a nonprofit he co-founded. After a two-year probe that included an FBI raid on Powell's Los Angeles mansion, authorities found no evidence to support the claims. This development comes amid Kraken's ongoing regulatory battles, including recent multi-million dollar settlements with US financial watchdogs.
Why Was Jesse Powell Under Federal Investigation?
The FBI launched its probe in late 2021 after Verge board members accused Powell of cybercrimes. According to court documents, the nonprofit claimed Powell had illegally accessed their Slack channels and email accounts during a bitter leadership dispute. Things escalated dramatically in March 2022 when federal agents raided Powell's Brentwood home, seizing dozens of electronic devices. "The FBI raid was devastating both personally and professionally," Powell later told The New York Times. "It was shocking that this happened based on Verge's completely false allegations."
How Did Powell Clear His Name?
Powell fought back hard through both legal and public relations channels. His legal team, led by attorney Brandon Fox, proved the devices seized contained exculpatory evidence - including internal Verge communications that contradicted the nonprofit's claims. By July 2023, the DOJ had quietly backed off, eventually sending Powell's lawyers a formal "declination letter" stating the case was closed. "We sought this letter to help repair the damage to Jesse's reputation and Kraken's operations in our highly regulated industry," Fox explained to reporters.
What's the Backstory With Verge Center?
The conflict traces back to 2007 when Powell co-founded Verge Center for the Arts in Sacramento. Tensions boiled over in 2021 when board members allegedly staged what Powell calls a "power grab." In his 2024 civil lawsuit, Powell claims Verge executives secretly created new domain names and accounts before removing him from the board. "I didn't hack anyone or block access to accounts," Powell stated in court filings. "They conspired to push me out and fabricated these allegations." The lawsuit specifically targets Verge's legal counsel Phil Cunningham for allegedly withholding exonerating documents.
How Does This Affect Kraken's Regulatory Troubles?
While Powell personally dodged criminal charges, Kraken continues facing intense regulatory scrutiny. The exchange paid $360,000 in 2023 to settle Treasury Department allegations it violated US sanctions by processing Iranian transactions. Then in February 2024, the SEC hit Kraken with a $30 million penalty over unregistered securities offerings. Despite these setbacks, Kraken remains active in institutional crypto services, recently partnering with Nasdaq-listed Windtree Therapeutics to manage their BNB-based treasury operations.
What's Next for Jesse Powell?
With the criminal probe behind him, Powell appears focused on clearing his name completely through civil litigation. The case offers a cautionary tale about mixing nonprofit work with cryptocurrency fortunes. As one industry insider quipped, "In crypto, even your art charity can turn into a regulatory nightmare." Powell's experience highlights how quickly personal disputes can escalate when billions in crypto wealth are involved.
Frequently Asked Questions
What was Jesse Powell accused of?
Powell faced allegations that he illegally accessed digital accounts belonging to Verge Center for the Arts, a nonprofit organization he helped establish in 2007.
When did the FBI raid Powell's home?
Federal agents conducted the raid in March 2022, seizing numerous electronic devices from Powell's Brentwood residence in Los Angeles.
Has Kraken faced other regulatory issues?
Yes, Kraken paid $360,000 in 2023 for sanctions violations and $30 million in 2024 for unregistered securities offerings.
What evidence helped clear Powell?
Internal Verge communications stored on the seized devices reportedly contradicted the nonprofit's allegations against Powell.
Is Powell still involved with Verge Center?
No, court documents indicate Powell was removed from the board during the disputed leadership transition in 2021.
