tl;dr
The US Justice Department has closed its investigation into Jesse Powell, founder of Kraken, and returned laptops and phones seized two years ago. The inquiry stemmed from a governance dispute at the Verge Center for the Arts, a nonprofit Powell founded, not from Kraken's business. Initial media rep...
The US Justice Department has officially closed its investigation into Jesse Powell, founder of Kraken, and returned numerous laptops and mobile phones seized by the FBI two years ago during a raid. This federal inquiry was not related to Kraken's business activities but stemmed from a contentious governance dispute at the Verge Center for the Arts, a Sacramento-based nonprofit Powell established in 2008.
The initial reports, including a New York Times article, suggested dramatic allegations of hacking and cyber-stalking against Powell. However, court documents reveal that the conflict was more mundane, centering around control issues of Verge's Slack and Google Workspace accounts after Powell was removed from the board. Powell contends he never blocked access to these accounts and claims that Verge insiders had secretly created alternate domains and accounts in their effort to remove him.
Currently, Powell is pursuing a civil lawsuit against former board members, accusing them of defamation and wrongful removal. Recently filed documents include a declination letter from prosecutors confirming that the Justice Department has dropped the case. This move aims to counteract the reputational harm from the FBI raid and to reassure regulatory bodies that Kraken’s management is not under federal investigation.
Powell described the raid as “devastating” both personally and professionally, asserting that evidence uncovered in his ongoing lawsuit already disproves the initial allegations. Despite the Justice Department stepping back, unanswered questions remain. Neither the Justice Department nor the FBI have explained how investigative details were leaked to the media.
Additionally, Powell’s filings accuse two Verge board members, including attorney Phil Cunningham, of withholding crucial documents during legal proceedings. The Verge Center for the Arts continues its active presence in Sacramento’s arts community, supported by substantial donations and prior technical help from Powell.
In a curious note, Powell declined to confirm whether the seized devices contained Bitcoin or other digital assets. At the time of seizure, Bitcoin was trading near $23,000, while as of this report, BTC has surged dramatically to about $119,000.