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Kraken finds itself embroiled in a tumultuous turn of events as the United States Federal Bureau of Investigations (FBI) set its sights on the home of Jesse Powell, one of the crypto exchange’s co-founders. 

The search, which reportedly took place in March, was part of a wide-ranging investigation into allegations of hacking and cyber-stalking directed at a non-profit arts group.

The target of this alleged misconduct: Verge Center for the Arts, an organization established by Powell himself. 

<a href="https://www.nytimes.com/2023/07/06/technology/jesse-powell-kraken-crypto-fbi.html” target=”_blank” rel=”noopener nofollow”>According to The New York Times, which recently shed light on the matter with insights from three informed individuals, it is contended that Powell cunningly manipulated computer accounts, obstructing access to crucial emails and other communication channels utilized by contributors of the non-profit.

Electronic Devices Seized In Kraken Co-Founder’s Home 

As part of their search, the FBI reportedly seized various electronic devices from Powell’s residence in Brentwood, Los Angeles. While this action suggests a serious inquiry, it is important to note that prosecutors have not officially charged Powell with any criminal offenses, leaving the allegations hanging in a state of uncertainty.

Kraken former CEO Jesse Powell. Image: David Paul Morris/Bloomberg

Powell’s involvement with the arts group dates back to its inception in 2007, according to the organization’s records. However, his LinkedIn profile indicates that he has held the position of founder and board member since April 2010, providing some clarification on his role within the non-profit.

Insiders familiar with the matter, as reported by The New York Times, state that the investigation primarily centers around the claims made by Verge Center for the Arts, with the focus primarily on Powell’s alleged actions within the organization.

Importantly, Powell’s lawyer, Brandon Fox, emphasized that the scrutiny does not extend to Powell’s involvement in the cryptocurrency industry, a statement reportedly corroborated by a spokesperson from Kraken.

Bitcoin slightly above the $30K level. Chart: TradingView.com

Enforcement Action And Settlement With SEC

Kraken previously found itself on the receiving end of enforcement action by the US Securities Exchange Commission (SEC) in February. The SEC accused Kraken of neglecting to register the offer and sale of their staking service program, a violation of regulatory requirements.

However, instead of engaging in protracted legal battles, Kraken opted to settle the matter with the securities regulator, agreeing to pay a substantial fine amounting to $30 million.

Despite the regulatory setback, Kraken remains a prominent player in the United States’ cryptocurrency exchange market. According to CoinMarketCap, Kraken maintains its position as the second-largest US-based cryptocurrency exchange, trailing Coinbase.

As the investigation unfolds, the spotlight intensifies on Powell, thrusting him into an intricate web of legal and ethical questions surrounding his alleged activities within the arts group he founded.

Featured image from Communist Party USA

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