Faces of crypto: Jesse Powell, Kraken co-founder
Jesse Powell, labeled as a "crypto agitator," has gone from selling World of Warcraft gold to co-founding a leading crypto exchange. This industry veteran has witnessed it all, from the Mt. Gox collapse to the rise of the first crypto billionaires. Learn more about the life and views of the outspoken co-founder of Kraken.
Like many crypto celebrities, Powell had humble beginnings. Growing up in a low-income family forced him to become an entrepreneur early. He once reminisced, "I was always out in the neighborhood doing chores for cash — washing cars, mowing loans, that kind of stuff." At just 14, Jesse got his first real job as a homeowner's association office clerk.
Later, he started meeting older, "more entrepreneurial" people through playing Magic: The Gathering, a tabletop and digital collectible card game. While traveling to tournaments across the US, Powell learned to profit from arbitrage card trading.
Virtual assets and art
In 2001, Powell got involved in virtual goods trading. First, he established Lewt, Inc., a provider of account management services and in-game currencies to gamers. Powell served as its CEO for a decade — until 2011. His other enterprise, Internet Ventures & Holdings, also rendered services to the online gaming community.
Next came physical art. In 2007, Jesse became the founder of the Verge Gallery and Studio Project, which became the Verge Center for the Arts, the largest contemporary commercial art gallery in Sacramento, California. Although Jesse left the project in 2010, he is still the center’s board member.
Mt.Gox hack as career inspiration
It all started with the troubled Mt. Gox cryptocurrency exchange. As described in the Kraken blog, Jesse Powell caught "a last-minute flight to Tokyo" in June 2011 to help the exchange recover from the first notorious hack that cost it $8.75 million.
Jesse volunteered his expertise and resources as a consultant for the then-largest crypto exchange. For two weeks, he helped CEO Mark Karpelès bring it back online. Roger Ver, who later became the CEO of Bitcoin.com, joined Powell in this endeavor.
Becoming Kraken co-founder
Mt. Gox's shortcomings inspired Jesse Powell to build his own, truly professional platform. He understood that exchanges were crucial to the Bitcoin ecosystem. Soon, he co-founded Kraken with fellow board member Thanh Luu, envisioning it as Mt. Gox's successor in case it shut down. The website went live on July 28, 2011.
The name of the mythical sea beast conveyed Jesse's hopes for his enterprise. He wanted it to be "intelligent, powerful, agile, robust, and secure." Mt. Gox eventually went under in 2014, a year after Kraken's official launch. By then, the Chief Executive Officer had long become a regular at San Francisco crypto meet-ups along with other visionaries like Brian Armstrong of Coinbase.
2020: Big year for Kraken
Under Powell's leadership, Kraken reached record trading volumes in 2020. It also expanded internationally, entering the Australian market and resuming operations in Japan following a two-year absence.
In September, Kraken became "the first digital asset company in US history to receive a bank charter recognized under federal and state law." Wyoming also approved its application "to form the world's first Special Purpose Depository Institution (SPDI)," providing deposit-taking, custody, and digital asset services.
Powell compared the creation of Kraken Bank to "the holy grail." Cointelegraph described it as "a turning point in the integration of crypto with mainstream finance that will put traditional banks to shame with its 100% backing."
As the world governments grappled with the pandemic, Powell did not conceal his skepticism about the Fed's monetary policy. Echoing the views of many crypto enthusiasts, he advocated for hard digital currency in light of rampant money printing.
Fast company growth
Between 2016 to 2022, Kraken’s staff grew from 50 to over 3,000 workers. It struck up strategic partnerships and secured multiple global regulatory licenses. The company acquired Cryptowatch, a charting and trading platform, Staked, a non-custodial staking platform, and 14 other businesses.
In 2021, its annual revenue more than tripled, reaching $1.36 billion. By September 2022, Kraken had become the ninth-biggest cryptocurrency exchange with a 24-hour trading value of nearly $648 million.
Clashes with regulators and other controversies
Powell has always been a vocal critic of regulatory overreach. Advocating for broader crypto adoption, he has even criticized the attorney general of New York for his attempts to acquire operational data about Kraken.
In 2015, the platform discontinued support for New York residents citing legal business requirements for crypto exchanges, including "the abominable BitLicense." Powell described the state's law enforcement system as "a creature so foul, so cruel that not even Kraken possesses the courage or strength to face its nasty, big, pointy teeth."
In September 2018, the NY AG's office published a report suggesting that Kraken and a few other exchanges could be operating illegally. Responding on Twitter, Powell compared the state authorities to "that abusive, controlling ex you broke up with 3 years ago but they keep stalking you, throwing shade on your new relationships, unable to accept that you have happily moved on and are better off without them."
Furthermore, Powell soon doubled down on attacking the New York Attorney General. He stated that most crypto traders did not care about regulation and "conforming to Wall St.'s image of what crypto markets should be." At the same time, the cooperation of some exchanges with the NYAG's office was "placative kowtowing" to "abuse."
In August 2022, The US Treasury blacklisted Tornado Cash for letting hackers launder $7 billion in crypto since 2019. Kraken CEO condemned the sanctioning of the crypto privacy mixer, calling it "unconstitutional" and a "knee-jerk" reaction to Terra's downfall.
Bitcoin ABC lawsuit
In 2018, United American Corporation (UAC) sued Jesse Powell, Roger Ver, Bitmain co-founder Jihan Wu, and Bitcoin ABC developers. The tech company alleged they had conspired to manipulate Bitcoin Cash during the hard fork that created Bitcoin SV.
According to UAC, they had unfairly redirected hashing power, forcing the implementation of the Bitcoin ABC design to the detriment of the BCH network. That lawsuit was dismissed in 2020.
Corporate culture war
In 2022, Powell made headlines again — this time, for questioning gender pronouns, calling most US women "brainwashed," and debating who could use the N-word. According to The New York Times, he asked his staff, "If you can identify as a sex, can you identify as a race or ethnicity?" Those statements "ignited a culture war" among his 3,000 employees.
The CEO presented a 31-page document detailing the company's culture, "libertarian philosophical values," and commitment to "diversity of thought." He also explicitly told employees in a meeting that he considered preferred pronouns impractical.
Those who disagreed, he said, were free to resign. He also incentivized them to leave through the "Jet Ski" program, which provided four months of severance pay.
Powell's attempt to push boundaries may have been part of a larger effort to purge the crypto industry of those who did not share its philosophy. It was also in line with the views he had expressed long ago. In a 2018 crypto podcast, he mentioned an "ideological purity test… of whether you're kind of aligned with the vision of Bitcoin and crypto." Four years later, his stance on ethics prompted some employees to quit.
Business Insider quoted Powell as saying that only "20 people out of 3200" disagreed with the company's anti-woke policies. Eventually, that number grew to 30.
Treasury Department's investigation
In July 2022, The Treasury Department’s Office of Foreign Assets Control investigated Kraken on suspicion of sanction violations. Several sources alleged it let residents of sanctioned countries, such as Iran, use its exchange services. As part of a settlement reached in November, Kraken agreed to pay roughly $362,000 and "invest an additional $100,000 in certain sanctions compliance controls."
Kraken CEO Jesse Powell steps down
In September 2022, Powell said he was leaving the top job to become the chair of Kraken's board. As CEO, he was succeeded by Chief Operating Officer Dave Ripley. As of this writing, the company is still searching for a new COO, so the transition is yet to be finalized.
Powell explained his decision by a lack of "fun" and the "draining" nature of CEO work due to Kraken's growth. However, he remains the biggest shareholder and plans to stay engaged. He said, "I look forward to spending more of my time on the company's products, user experience, and broader industry advocacy."
Undaunted Bitcoin evangelist
In March 2021, Powell told Bloomberg that it was "very reasonable" to expect BTC to become worth $1 million over the next decade. The following year, the market faced one of the harshest crypto winters, and BTC shed 75% of its value. A string of black swans like the Terra collapse and FTX bankruptcy caused trading volumes to shrink, denting Kraken's revenue.
However, Powell is bullish on the long-term prospects of the crypto industry. Speaking to Bankless, he said, "I think there will continue to be bad actors that come in that we have to get out. There’s going to continue to be blows against the industry, and misleading information out there. Ultimately, I think we got to remember why crypto is here in the first place, and that's to deliver Bitcoin and financial freedom basically to the whole world."
A firm believer in the future of NFTs and DeFi, Powell also expects "the tokenization of basically everything." As more real-life cases for NFTs emerge, he thinks they will help the industry grow and burgeon secondary markets for digital assets. "I think we need to find more things like that which are sort of this gateway use case for people who ask 'why would I need Ethereum? What am I gonna do with it?'"