Kraken’s co-founder Jesse Powell became a person of interest as the FBI [Federal Bureau of Investigation] searched his Brentwood residence in Los Angeles’ Westside, seizing electronic devices.
On July 6, The New York Times reported that Powell is under investigation for alleged hacking and cyberstalking of a non-profit that he founded.
FBI and the U.S. Attorney’s office for the Northern District of California launched the criminal investigation following Verge Center for Art’s allegations that the former Kraken CEO interfered with its computer accounts, preventing access to emails and other information, the report stated quoting three unnamed individuals.
Powell, according to the prosecutors, has been on their radar since last September. He hasn’t yet been charged with any offenses, though.
In a statement provided by his lawyer Brandon Fox, Verge “provided a one-sided account that did not provide the government with the full picture, showing that Powell “did nothing wrong.”
Adding that the matter is not related to “Mr. Powell’s employment or his conduct in the cryptocurrency arena.”
Mr. Fox said the investigation was focused on the allegations by the arts group, Verge Center for the Arts, and “in no way related to Mr. Powell’s employment or his conduct in the cryptocurrency arena.” He also said Mr. Powell “did nothing wrong.”
A Kraken official confirmed the same, stating that the Verge investigation had nothing to do with the trading company and that Kraken had no reason to suspect that law enforcement was looking into any other potential problems.
Kraken’s Showdown With The IRS and SEC
The US cryptocurrency exchange suffered a severe setback when a federal judge decided that it must turn up customers’ account and transaction data in response to a petition filed by the Internal Revenue Service [IR]) earlier this year.
The IRS wanted the data to look into potential tax underreporting by Kraken users. The court’s outcome was viewed as a kind of model for future proceedings by tax authorities looking to find unreported tax liabilities among cryptocurrency users.
Several months back, Kraken found itself in the eye of a regulatory maelstrom after striking a settlement with the U.S. Securities and Exchange Commission in February that required it to pay $30 million and stop providing staking services to clients in the United States.