When federal agents raided the home of Kraken founder Jesse Powell two years ago, the Justice Department was in the midst of a sweeping legal campaign against the cryptocurrency industry. The raid, however, had nothing to do with how Powell operated his crypto exchange but instead stemmed from a management dispute with an arts non-profit he had founded. The Justice Department has now dropped the investigation and returned dozens of laptops and cellphones it seized from Powell’s home—but questions remain about why the agency pursued him so aggressively, and how news of the raid leaked to reporters at the New York Times.
In the lawsuit, filed last year in state court, Powell says that he did not hack or stalk anyone, or cut off access to the accounts. Instead, he alleges that Verge executives conspired to remove him from the board, and that they quietly put in place a new domain name and created new workplace accounts before doing so. Powell founded Verge in 2008 to support the arts in Sacramento, where he lived for many years.
Now, documents filed by Powell this week reveal that the Justice Department has dropped the investigation entirely, and returned his cell phones and laptops. The filings add that the returned devices contain information related to Verge that prove Powell’s account of events is correct.
In an email statement to Fortune, Powell expressed relief that the probe has ended and said he intends to continue his civil lawsuit against members of Verge’s board.
“The FBI’s raid on my house was devastating both personally and professionally. It is still shocking that the raid was premised on Verge Center for the Arts baseless accusations against me. I knew that I had done nothing wrong, and discovery in my defamation case against Verge has shown this is undeniable,” said Powell.
In the recent court filing, Powell also alleges that the two Verge board members who sought to remove him failed to turn over key documents during the discovery process. This is a serious allegation, especially concerning one of the board members, Phil Cunningham, who also serves as a lawyer for Verge.
In response to an email about Powell’s allegations, Cunningham declined to comment.
The Justice Department declined to comment on the letter, or on whether the agency was aware of how details of its investigation leaked to the New York Times in the first place.
As for Verge, which Powell has backed over the years with tech support and over $1 million in personal donations, it continues to be a fixture of the arts scene in Sacramento, despite the ongoing litigation.
