Federal prosecutors have officially ended their investigation into Kraken founder Jesse Powell, nearly two years after FBI agents raided his home in a high-profile case unrelated to his crypto business.
The Justice Department returned dozens of devices, including laptops and mobile phones, confirming it had dropped the case, one that centered not on Kraken, but on a management fallout involving an arts nonprofit Powell had co-founded, Fortune reported on Tuesday.
Powell had come under federal scrutiny after allegations surfaced that he had "hacked and cyber-stalked" Verge Center for the Arts, a Sacramento-based organization he launched in 2008.
Media reports at the time, notably from The New York Times, amplified the story, linking Powell's legal troubles to his often controversial online persona and public statements.
But newly filed court documents paint a different picture.
Powell asserts that the real dispute with Verge board members was over access to shared Google and Slack accounts, tools essential for managing the nonprofit.
He accuses Verge's leadership of orchestrating his removal from the board and covertly shifting operations to new domains and communication platforms.
According to a recent court filing, the returned devices contain records that corroborate Powell's version of events.
"The FBI's raid on my house was devastating both personally and professionally," Powell said in a statement to Fortune, calling Verge's allegations baseless and defamatory.
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The civil lawsuit Powell filed against Verge continues in state court.
He has also accused two board members of withholding critical documents during the discovery phase, one of whom, Phil Cunningham, also serves as Verge's legal counsel. Cunningham declined to comment when contacted.
Powell's attorney, Brandon Fox, confirmed receipt of a "declination letter" from the Department of Justice, officially closing the federal investigation.
Fox said the letter was essential for repairing damage done to Powell's reputation and to Kraken's regulatory standing in the financial industry.
The Justice Department has not commented on the declination or on how details of its probe were leaked to The New York Times.
Meanwhile, Verge remains active in Sacramento's arts scene, despite the ongoing legal tensions with its founder.
Powell has not disclosed whether any cryptocurrency assets were recovered along with his devices, at the time of seizure, Bitcoin (CRYPTO: BTC) traded at roughly $23,000, compared to around $118,500 today.
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