- By Amy Castor and David Gerard
Jesse Powell, who launched the Kraken crypto exchange in 2013, got a surprise knock on the door in March when the FBI showed up at his $11 million Los Angeles home for an unannounced search — and left with some of his electronics.
Powell’s house was searched because of allegations that he was hacking and cyber-stalking Verge Center for the Arts, a Sacramento non-profit that he founded in 2007 and bankrolled for several years.
In the wake of the FBI search, Powell is now suing Verge for booting him off the board in 2022. [New York Times, archive]
After the crypto bubble popped in May 2022, Powell became notably more vocal in his crank political views. We’re guessing the Verge board was fed up with his antics, and it wasn’t helpful to them in dealing with more normal art supporters.
Powell feels deeply hurt by getting ousted from the board of Verge. He responded by suing Verge to return his donations to the charity and to reinstate him to the board. We’re not sure those two things go together.
How Verge happened
Powell got his start trading Magic: the Gathering game cards as a teenager in the 1990s. That’s how he met his school friend Roger Ver, who later became a huge bitcoin investor and promoter.
Like a lot of other early bitcoiners, Powell was into video gaming. Many games have their own in-game currencies — often called “gold” — that gamers use to buy and sell digital items, like characters and weapons.
In 2001, Powell co-founded Lewt, an online company that sold virtual items and currencies related to games like Blizzard Entertainment’s Diablo II and World of Warcraft.
How did Lewt work? When Diablo III came out in 2012, Powell wrote on his personal blog that he was “Offering $1,000,000+/yr for reliable, unlimited and exclusive Diablo 3 item and gold supply.” [Forthewin, 2012, archive]
Powell didn’t ask how or where you obtained that supply: “Please take measures to anonymize yourself when contacting me.”
It’s difficult to overstate how much the majority of gamers hate guys like this. GameFAQs user FindKenshi wrote in May 2012: “The man made hundreds of millions of dollars off of ‘black market’ item sales, and his massive supply came from a never ending stop of exploits, hacks, insiders from Blizzard, and other sources … No wonder hundreds of accounts are getting stolen every day.” [GameFAQs, 2012, archive]
In 2007, Powell took some of the money he earned from selling virtual game items and leased a long-empty former Napa Auto Parts warehouse in Sacramento on the corner of 19th and V. Streets. He invited area artists to apply for free studio space. And so, Verge was born, initially as a commercial enterprise.
In 2010, Verge Center for the Arts was incorporated as a nonprofit. The space moved to a new location at 625 S. Street on the corner of 7th and S. Streets. Verge bought this building in 2014 when it merged with the Center for Contemporary Art Sacramento. [Baartquake, 2009; Verge]
Verge executive director Liv Moe claims responsibility for growing the arts group into a commercial gallery. Today, Verge houses three to four exhibitions per year, offers classes, labs, and workshops for artists, and has over 40 resident artists. [LinkedIn, archive]
Powell’s erratic behavior
Jesse Powell holds many bizarre opinions, which he’s been happy to express for years. A lot of these opinions are quite prevalent in the bitcoin world.
Powell fully subscribes to the conspiracy-originated “sound money” theories of bitcoin — though at least he doesn’t believe the US is headed for hyperinflation. He is, however, a committed bitcoin moon boy: “when you measure it in terms of dollars, you have to think it’s going to infinity.” [Fortune, 2020; Bloomberg, 2021, video]
Powell also a COVID conspiracy theorist and vaccine denialist. He believes in “natural immunity,” claims there exists an “anti-science Cult of Vaxx eugenics program,” and warns of a “China COVID psyop.” He is outraged at the lack of respect for “alternative treatments,” such as ivermectin — which, to be clear, doesn’t do anything for COVID, and only cranks think so. But Powell assures us that he respects “vaxxed people, some of whom are statists with compromised immune systems.” [Twitter, archive; Twitter, archive; Twitter, archive; Twitter, archive; Twitter, archive; Twitter, archive; Twitter, archive]
So Powell is nuts — or “eccentric,” since he’s rich. That’s not a major problem as long as he’s not acting-out nuts where people outside the bitcoin world can hear him. But after the crypto market crashed in May 2022, Powell started acting out.
In June 2022, the New York Times — or “Satan,” if you’re a Silicon Valley tech CEO — wrote about workplace issues at Kraken after it got hold of a “culture document” that Powell had written up and distributed to staff. [New York Times, archive]
A later version of the guide was posted publicly — one that, among other changes, no longer explicitly listed the rights to COVID denial and bearing arms that were in the version the New York Times saw. [Kraken, archive]
Powell was doing things at Kraken that would have been disciplinary offenses in any reasonable workplace — particularly in California — if he were not the CEO. As Jesse described the issues he was having with employees: [Twitter, archive]
5/ What are they upset about?
- * DEI (Silicon Valley’s version)
- * pronouns, whether someone can identify as a different race and be allowed to use the N-word
- * whether differences in human sex exist at all
- * being respected and unoffended
- * being “harmed” by “violent” words
In a company Slack channel labeled “and you thought 4chan was full of trolls,” the person asking if he could identify as a different race to say slurs in the workplace and who led discussions of whether women were just naturally stupider than men and whether “most American ladies have been brainwashed in modern times” was, of course, Powell himself.
After the New York Times story, Powell tweeted: “Back to dictatorship.” [Twitter, archive]
Three months later, in September 2022, Powell stepped down from his role as CEO of Kraken. Powell was still Kraken’s largest shareholder and became chairman of the board. [Kraken, archive; New York Times, archive]
Nobody had the power to fire Powell, so he would have stepped down voluntarily — likely under pressure. We suspect that someone convinced him that his HR attitude was not going to be good for a business that dealt with highly regulated financial services and was already under investigation for sanctions violations.
Guiding principles: Powell sues Verge
After the FBI raid, Powell sued Verge and Verge’s treasurer and counsel Phil Cunningham in June 2023. Powell alleged that Verge directors conspired against him while continuing to take his money, then pushed him out. His PR company kindly sent us a copy of the complaint, as written up by his attorney, Brandon Fox. [Complaint, PDF]
Powell says that he had provided Verge with years of financial and technical support — and the Verge board turned on him last summer. On June 20, 2022 — shortly after the New York Times story — the board held a secret meeting where they declared Powell’s seat vacant as of October 2019.
Since Powell didn’t attend board meetings at all — he says he didn’t have to as a founding member — he didn’t learn that he was out until October 2022, when he discovered he had been removed from the board’s distribution list and his name had been wiped from Verge’s public-facing platforms.
Powell put $1.5 million into Verge, according to the complaint. He registered vergeart.com — the domain name Verge used up until June 2022 — and paid for the domain and its hosting fees. He also paid for Verge’s G Suite and Slack accounts.
Verge asked for the domains and accounts back so that “no one individual owns anything important to the org” — which is reasonable and normal, and Verge really should have insisted on this in 2010 when it became a non-profit.
(That said, we fully understand that it can take charities ages to get around to basic things.)
After Powell was kicked off the board, Verge set up a new domain, vergecontemporaryart.org, and redirected the vergeart.com domain. Powell said that the vergeart.com was his domain and he objects to Verge putting the redirect in place “without Mr. Powell’s permission or awareness.”
Powell says that Verge founding director Liv Moe, Verge president Gwenna Howard, and Cunningham wanted him gone because “they disagreed with what they believed to be his views on certain social, cultural, and political issues.” Well, yes.
Howard wrote to Powell: “The Board finds your views to be completely contrary to Verge’s Guiding Principles.” These would have been the views revealed in the June 2022 New York Times story. [Guiding principles, archive]
Verge’s guiding principles state that “Verge is committed to becoming a more open and welcoming organization” and seeks to embrace “different ethnicities, skin colors, gender identities and body types, religious beliefs, physical or cognitive challenges, or socio-economic standing.”
Powell says his views do align with Verge’s guiding principles, and that it was actually Moe who violated the principles. His evidence is two tweets from several years back mentioning white people.
Cunningham’s cease and desist to Powell
Powell’s behavior led to Cunningham writing to Powell and Kraken on November 2, 2022 — two months after Powell stepped down as CEO. Powell claims in his suit that Cunningham “defamed him with falsehoods”:
In telling Mr. Powell’s employer that, among other things, Mr. Powell effectively hacked Verge’s domain and accounts, blocked Verge’s access to its accounts and domain, and refused to relinquish control over Verge’s domain and accounts, Mr. Cunningham, individually, and Verge, acting through Mr. Cunningham as its agent, expressed false statements about Mr. Powell and implied that Mr. Powell was unprofessional and dangerous, and that he had committed a crime.
This letter wasn’t some casual personal communication — it was Cunningham writing “in my official capacity as counsel for VERGE Center for the Arts, a California not for profit corporation.” [Letter, PDF]
This was a legal demand to cease and desist hampering the operations of the charity.
Cunningham complains that Powell has blocked Verge from its usual email accounts and interfered with its technology services. He complains of the “substantial cost and delay” that Powell has incurred for Verge.
Jesse didn’t take his ouster lying down — he used the old vergeart.com domain that he still controlled to and put up a website saying that he was still on the board!
VERGE believes you have used its old domain to create an internet copy of the VERGE website and then changed that website to reflect that you are still a member of the board of directors.
Unsurprisingly, Verge considers this behavior may cause them reputational damage — whether Powell owns the registration to vergeart.com or not.
Cunningham cites California precedent that “your control of the domain names is like owning a storage locker and you refuse to give VERGE the key to the locker so it can retrieve its property.”
Cunningham’s key point is:
The business records and email communications associated with VERGE are the personal property of VERGE.
Powell fails to realize this. He paid the bills for the accounts — but the contents belong to the charity, which is its own entity.
What happens now?
Powell wants Verge to pay damages determined by trial and disgorge the money he gave them after he was covertly booted. He also demands to be put back onto the board.
Those two things aren’t going to go together. Powell put his heart and soul into Verge for years — but Verge is a separate corporation from its founder, and its founder’s views have diverged from the charity’s. Powell’s suit repeatedly fails to understand that the charity is not his personal property.
This suit is not sane and balanced behavior. It’s completely sincere, and Powell’s hurt and pain are real — he feels betrayed. But that’s not enough to make a lawsuit a good or viable idea.
At the very least, Jesse should have contacted his lawyer before he held Verge’s daily office work accounts hostage and edited its website.
We would expect the equitable outcome to end up being something like, Powell giving back the domain and email accounts and Verge returning some of his donations. But that may be too reasonable for Powell.
Verge has until August 7 to respond to Powell’s complaint. We look forward to hearing Verge’s side of the story.
Amy Castor 