Reports indicate that the US Department of Justice has officially concluded its investigation into Jesse Powell, the founder of Kraken. According to a Fortune article on July 22, authorities have returned numerous laptops and mobile phones that were seized during an FBI search conducted two years ago.
The federal inquiry, as previously noted, was separate from Kraken’s business operations. Instead, it stemmed from a contentious disagreement regarding governance at the Verge Center for the Arts, a Sacramento-based nonprofit organization established by Powell in 2008.
Initial reports of the investigation emerged in The New York Times, which detailed that the search was initiated based on allegations that Powell had engaged in “hacking and cyber-stalking” targeting the nonprofit.
Subsequent court documents reveal a less dramatic scenario: a dispute concerning the control of Slack and Google Workspace accounts following Powell’s removal from the Verge board.
Powell has maintained his innocence, asserting that he never restricted anyone’s access. He contends that Verge insiders secretly created a new domain and parallel work accounts prior to his ouster.
He is actively pursuing a civil lawsuit in state court, accusing former colleagues of damaging his reputation and improperly removing him from his position.
Justice Department Declines to Pursue Case
This week, Powell filed documents including an official letter from prosecutors confirming the Justice Department’s decision to drop the case.
Powell’s legal representative stated that the request for the letter was made to address the reputational harm caused by the search and to reassure financial institutions and regulatory bodies that Kraken’s leadership is not under federal investigation.
Powell described the search as “devastating” to both his personal and professional life, asserting that evidence uncovered during the lawsuit has already demonstrated the accusations to be unfounded.
Despite the government’s decision, questions remain unanswered. Neither the Justice Department nor the FBI has provided an explanation regarding how The New York Times obtained confidential details of the investigation.
In his recent filings, Powell also alleges that two Verge board members, including attorney Phil Cunningham, withheld vital documents during the discovery process.
Meanwhile, Verge continues to be a prominent feature of Sacramento’s artistic community, having received over $1 million in donations and substantial technological support from Powell over the years.
Interestingly, Powell has chosen not to disclose whether the returned devices contained Bitcoin or other digital assets. At the time of the seizure, Bitcoin (BTC) was trading around $23,000. Currently, its value is approximately $119,000.