Back in March, federal investigators searched the home of Jesse Powell, founder of the second biggest US-based crypto exchange Kraken. Federal agents entered Powell’s home in Brentwood, California as a part of an ongoing investigation on the CEO for allegedly cyber-stalking an art non-profit organization he owns.
The investigation focuses on allegations that Powell manipulated computer accounts, blocking access to emails and other messages. Further allegations claim that the CEO also accessed personal data stored on the NGO’s computers. Hence, federal agents seized electronics during the house search.
Jesse Powell’s lawyers say that he didn’t do anything wrong and specifically pointed out that the investigation is in no way connected to the crypto industry, i.e., his crypto exchange Kraken.
While prosecutors have yet to file any lawsuits against the Kraken founder, reports claim that Powell has been witnessed to commit several foul acts against his own art non-profit organization, Verge Center for the Arts.
Verge, the Sacramento arts group, a non-profit arts organization founded by Powell in 2007, removed him from its board of directors due to claims that he violated the organization’s guidelines, also that he failed to attend numerous meetings.
On top of that, Powell reportedly was seen engaging in debates regarding race and gender which naturally made many employees uncomfortable.
In November, Verge’s lawyer, Phillip Cunningham sent a letter to Kraken claiming that Powell blocked the NGO’s access to its email system, website, and internal messaging system after his removal from the board of directors. Cunningham’s letter also stated that Powell also immorally accessed confidential information stored in those accounts.
Powell proceeded to file a lawsuit against Verge, claiming that Cunningham had no right to make these claims considering that the Kraken CEO owned these accounts.
Naturally, the lawsuit led nowhere. And in September, Powell stepped down from the CEO position while maintaining the title of Chairman. The company’s leadership was instead taken over by Dave Ripley, Kraken’s chief operating officer.
Powell’s flagship company, Kraken is among several exchanges that constantly face legal actions taken by the US government.
In 2019, Kraken and Powell faced an “unlawful termination” lawsuit filed by a former Kraken employee, claiming that they were terminated for uncovering details regarding Kraken hiding some of their earnings and that the company dealt with countries that are under US sanctions. While the termination lawsuit was scrapped, the sanctions issue remained.
In 2022, Kraken paid the US Treasury Department a fine of $300,000 for allowing users in Iran, a country currently sanctioned by the US government, to use the platform for trading. Kraken also paid the SEC a hefty fine of $30 million for offering an investment product that the regulating body deemed unlawful.
Currently, two of Kraken’s biggest competitors, Binance and Coinbase are facing lawsuits filed by the SEC for varying allegations.
The SEC filed thirteen lawsuits against Binance for charges such as wash trading and commingling customer funds.
Coinbase, on the other hand, is facing a lawsuit filed by the regulating body for allegedly trading in what the SEC claims to be unregistered securities.