Kraken Distances Itself From Co-Founder Powell Following News Of FBI Raid On His House

San Francisco-based cryptocurrency exchange Kraken distanced itself from one of its founders and former CEO Jesse Powell after news surfaced online that he is under a high-stakes federal investigation and that his Los Angeles home was raided by the Federal Bureau of Investigation (FBI).

"Kraken has been made aware that former CEO Jesse Powell is involved in a civil dispute with a nonprofit art gallery, the Verge Center for the Arts," the exchange said in a statement, which was shared on Twitter by Fox Business journalist Eleanor Terrett.

"We understand there is a federal investigation open and search warrants were executed to gather more information about the Verge matter. The US Attorney has advised us that Kraken is not a part of the investigation in any way," the exchange further said.

Powell, along with Thanh Luu, founded Kraken in 2011. He is reportedly under investigation by the FBI over allegations that he hacked and cyberstalked Verge Center for the Arts, a non-profit that he founded, according to his lawyer.

Federal investigators are looking into allegations that the Kraken co-founder interfered with computer accounts of Verge Center for the Arts, and obstructed access to emails as well as other messages, the New York Times reported, citing three unnamed sources.

Further, the publication revealed that FBI agents went into Powell's Brentwood home in Los Angeles, searched and seized electronic devices.

Powell has been under investigation by the FBI and the U.S. Attorney's Office for the Northern District of California since the fall.

Powell, who is among the early adopters of cryptocurrency, co-founded Verge Center for the Arts in 2007. The organization which he helped build removed him from its board last year, alleging that he violated its "guiding principles."

Powell sued Verge Center for the Arts last month and claimed that he "owns and has rightful access" to the email accounts and that he remains a Verge board member.

Despite the brouhaha, it is worth noting that as of now, prosecutors have not accused Powell of any crime.

Powell announced that he was stepping down as the CEO of Kraken last September.

The crypto exchange platform remains the second-largest exchange by trading volume in the United States.

In February, the U.S. Securities and Exchange Commission (SEC) hit Kraken with enforcement action over its failure to register the offer and sale of its staking service program. The exchange settled with the financial regulator by paying $30 million in fines.