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The F.B.I. searched the house of the cryptocurrency government Jesse Powell in March as a part of a legal investigation into claims that he hacked and cyber-stalked a nonprofit that he based, three individuals with information of the matter stated.
The investigation targeted on an allegation by the nonprofit that Mr. Powell, who additionally based the cryptocurrency alternate Kraken, had interfered with its laptop accounts, blocking entry to emails and different messages, the individuals stated. Agents with the F.B.I. and the U.S. legal professional’s workplace for the Northern District of California have been wanting into Mr. Powell since not less than final fall, three individuals with information of the case stated.
Agents searched Mr. Powell’s residence within the Brentwood neighborhood of Los Angeles and seized digital units, in line with an individual accustomed to the search and paperwork reviewed by The New York Times. Prosecutors haven’t accused Mr. Powell of any crimes.
Brandon Fox, a lawyer for Mr. Powell, confirmed that he was below investigation by federal prosecutors in Northern California. Mr. Fox stated the investigation was targeted on the allegations by the humanities group, Verge Center for the Arts, and “in no way related to Mr. Powell’s employment or his conduct in the cryptocurrency arena.” He additionally stated Mr. Powell “did nothing wrong.”
A Kraken spokeswoman stated the Verge investigation had nothing to do with the corporate, and that Kraken had no cause to consider that prosecutors had been investigating different potential points.
An F.B.I. consultant declined to remark. A spokesman for the U.S. legal professional’s workplace for the Northern District of California declined to verify whether or not an investigation was underway.
In current months, federal investigators have cracked down on a number of of Kraken’s rivals. Sam Bankman-Fried, the founding father of the FTX crypto alternate, was charged with fraud final yr, whereas Coinbase and Binance, two of the biggest exchanges, face authorities lawsuits.
A key determine within the early historical past of crypto, Mr. Powell, 42, constructed Kraken into the second-largest U.S. crypto alternate behind Coinbase.
His firm has confronted years of authorized scrutiny. In current months, prosecutors have examined allegations towards Kraken and Mr. Powell that had been made in a wrongful termination lawsuit filed towards the corporate in 2019, two individuals accustomed to the probe stated. In that lawsuit, a former Kraken worker accused the agency of incomes income from accounts in nations that had been below U.S. sanctions, and claimed Kraken’s financial institution accounts had been lacking thousands and thousands of {dollars} of buyer deposits.
The go well with was settled in 2021, after a choose dismissed the worker’s declare that his firing was associated to the sanctions challenge.
Last yr, Kraken paid a $360,000 nice to settle Treasury Department expenses that it violated sanctions by permitting customers in Iran to commerce digital currencies. In February, Kraken paid a $30 million nice to the Securities and Exchange Commission for providing an funding product that the company stated violated securities legal guidelines.
Mr. Powell based Verge, the Sacramento arts group, in 2007. Last yr, the group eliminated him from its board of administrators, citing his failure to attend board conferences and violations of the group’s “guiding principles,” in line with courtroom information. The removing passed off after an article in The Times detailed Mr. Powell’s efforts to incite debates about race and gender that some Kraken staff discovered offensive.
After Mr. Powell’s dismissal, he blocked Verge from utilizing its web site, emails and inside messaging system, and improperly accessed confidential info saved in these accounts, in line with a letter that Verge’s lawyer, Phillip Cunningham, despatched to Kraken in November. The letter was reviewed by The Times.
Last month, Mr. Powell sued Verge in state courtroom in Sacramento, claiming his ouster was improper and that he owned Verge’s digital accounts. Mr. Cunningham, Verge’s lawyer, stated Mr. Powell’s claims didn’t have any benefit.
In September, Mr. Powell introduced he would step down as Kraken’s chief government whereas remaining chairman. He was changed by Dave Ripley, Kraken’s chief working officer, who took over the agency in March.
Kirsten Noyes and Kitty Bennett contributed analysis.