FBI Drops Case Against Kraken Co-Founder Jesse Powell Over Personal Dispute Citing Insufficient Evidence

The U.S. Federal Bureau of Investigation (FBI) has concluded a two-year investigation into Jesse Powell, co-founder of cryptocurrency exchange Kraken, and returned electronic devices seized during a 2022 raid on his home. The probe, which centered on allegations of hacking and cyberstalking an individual tied to the Verge Center for the Arts—a nonprofit Powell co-founded in 2008—has ended without charges. The case was unrelated to Powell’s role at Kraken or the broader cryptocurrency industry, according to reports. Powell, who stepped down as Kraken’s CEO in 2022, has consistently denied the allegations and pursued a civil lawsuit against Verge’s board of directors.

The investigation began in 2022 when the FBI searched Powell’s residence and confiscated devices, including laptops and mobile phones, which were returned in recent legal filings. Authorities reportedly ceased the inquiry after failing to secure sufficient evidence to support criminal charges. The focus of the probe remained on a personal dispute, with no indication of ties to Kraken’s operations or the crypto sector. Powell’s political activism, including a $1 million Ethereum (ETH) contribution to Donald Trump’s 2024 presidential campaign, has drawn attention to his profile but was not linked to the case’s resolution.

The termination of the FBI’s investigation offers clarity for Kraken and its stakeholders, as the case had raised questions about law enforcement’s engagement with crypto industry leaders. While the allegations against Powell were personal in nature, the incident highlights the vulnerability of executives to legal scrutiny stemming from unrelated private disputes. The case also underscores the complexities of navigating regulatory and legal risks in a rapidly evolving sector, where personal conduct and business operations can intersect unpredictably.

Separately, Kraken faced its own regulatory challenges in 2023 when the U.S. Securities and Exchange Commission (SEC) filed a lawsuit alleging the exchange operated without proper registration. The case was dropped in March under Acting SEC Chair Mark Uyeda, joining other enforcement actions against crypto firms that were abandoned amid a shift in the agency’s approach to regulation. These developments reflect broader uncertainty in the regulatory landscape, as agencies reassess enforcement priorities and the applicability of existing frameworks to digital assets.

The resolution of the FBI’s probe against Powell reinforces the importance of due process and evidentiary thresholds in high-profile investigations. For crypto executives, the case serves as a reminder that personal conduct can attract legal attention independent of business-related risks. However, it does not alter the broader challenges facing the industry, which continues to grapple with inconsistent regulatory signals and enforcement actions. The incident may encourage greater caution among industry leaders in managing both professional and personal affairs, though it does not address systemic issues such as the lack of clear legal frameworks for digital assets.

As the crypto sector matures, the distinction between personal and business-related legal matters will remain a critical consideration for stakeholders. The FBI’s decision to drop the case against Powell underscores the agency’s focus on evidence-based enforcement but also highlights the potential for unrelated disputes to impact the reputations and operations of industry figures. While the case concludes without charges, it leaves lingering questions about the balance between regulatory oversight and the protection of individual rights in an increasingly scrutinized market.