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Crypto co-founder sues board of one of S.F.’s most elite buildings for housing discrimination

Bitcoin pioneer Jesse Powell was on the forefront of disrupting the banking industry. Now, he’s trying to disrupt one of the most elite — and democratic — buildings in San Francisco’s Pacific Heights.

In a housing discrimination lawsuit filed in San Francisco Superior Court on Wednesday, the divisive co-founder of cryptocurrency exchange Kraken alleged that the co-op board of 2500 Steiner St. has unreasonably blocked him from purchasing a multi-million dollar home in the iconic, 12-unit building on the crest of the wealthy neighborhood. The lawsuit says the discrimination is based on his political views and line of business.

Though Powell has lived in Los Angeles for much of the past decade, his complaint has all the makings of a familiar San Francisco tale: It involves extreme wealth, a quest for housing gone awry, a dose of political squalor and some of the best views in town. Named “Susie’s Building” after the owner of its penthouse, businesswoman and longtime progressive donor Susie Tompkins Buell, the 2500 Steiner has earned a reputation for being a “bastion of San Francisco’s power democrats” and “one of the most lucrative buildings a democrat can visit.”

Powell is neither registered as a democrat nor a republican, but has been a staunch defender of individual liberty and recently “supported nationally popular conservative causes,” per his complaint. He has also donated to President Donald Trump’s presidential campaign. Now, he’s accusing the building’s co-op board of scheming to discriminate against him by “refusing to approve the sale.”

His lawsuit specifically calls out Bruce Golden, a partner at venture capital firm Accel, who Powell alleges “made it his personal mission to deny the sale.”

The Chronicle’s efforts to reach Golden and the other co–op members on Wednesday were unsuccessful. Mark Buell, Susie Tompkins Buell’s husband, declined comment.

Powell is no stranger to controversy. He has faced criticism for, among other things, questioning gender pronouns and racial terms.

He stepped down as the CEO of Kraken last year but remains affiliated with the company as the chairman of its board.

In 2022, Kraken shuttered its San Francisco headquarters. At the time, Powell blamed street conditions in San Francisco, stating that “crime, mental illness and drug abuse are out of control in the city.” However, reports over the summer indicated that the company was working toward an IPO. Powell declined to comment.

During an interview with the Chronicle on Wednesday, Powell said he believes that his work in cryptocurrency and a 2023 FBI search of his Los Angeles home over claims that he hacked and cyber-stalked a nonprofit arts group that he founded, are to blame for the 2500 Steiner co-op’s rejection of his bid to join their community. Powell said that he was never charged with any crime in connection with the search.

“Given their political leanings, they may have also discriminated on the basis of what they imagined my political beliefs to be, in the absence of actually having a conversation with me,” Powell told the Chronicle.

According to the complaint, Powell entered into a purchase agreement with the “willing sellers” of an undisclosed unit in the building in September. The lawsuit states that the unit had been privately marketed for sale for at least a year. But, the co-op’s bylaws require that nine of the building’s 11 non-selling shareholders approve the sale, and its board must also approve.

Powell’s lawsuit alleges that the board “worked tirelessly to make sure the sale would never make it to a shareholder vote,” and accuses Golden of “spearheading” the opposition.

“Despite Mr. Powell’s willingness to purchase the unit and the sellers’ willingness to sell, Mr. Golden and the Corporation had other plans,” the lawsuit alleges. It states that Powell’s application was denied in October, initially without justification.

Powell’s complaint alleges that he was later told by property management that the board “had a number of concerns with the application which were deemed to be unresolvable,” and ultimately was told that the denial was a “matter of finances” — specifically, they said that Powell did not provide a signed tax return.

“As an initial matter, a signed tax return was never a requirement and the Board had not asked for one,” the lawsuit alleges. “The Board had already received a copy of the all-cash offer, a letter from Mr. Powell’s CPA, and publicly verifiable background information substantiating Mr. Powell’s financial qualification.”

The lawsuit references a more than $800,000 transfer tax that the city has lost out on due to the scuttled deal, which would place the purchase price of the unit around $14.5 million.

Powell said that he followed up with additional financial information, and “even offered to pre-pay ten years of HOA dues and taxes.”

A required meeting with the co-op’s “House Committee” was scheduled in November, four days after the end of the escrow period between the sellers and Powell, but he was rejected once more.

Last month, Powell tried to appeal to individual co-op members with written letters, in which he pleaded his case and promised to be a good neighbor. He did not hear back.

Asked why he would want to live in a community that does not appear to want him, Powell told the Chronicle that he is “set” on moving back to San Francisco — and the 2500 Steiner building, he said, has the “best views in town.”

“It felt like there was a lot of momentum building in San Francisco for some real change. And we got quite a bit of change in November,” Powell said, referring to the recent mayoral election. “That reinforced my thinking that it was a good time to come back and to contribute to the revitalization of the city and be a part of that.”

Powell also wants to call out what he labeled as “hypocrisy.”

“Just looking at the political backgrounds of these people and the causes they support, like diversity and inclusion … all of these so-called ‘progressive ideas’ — meanwhile they’re just incapable of having a conversation and maybe to learn more about somebody who wants to be their neighbor,” Powell said.

Cyrus Koochek, a partner with Los Angeles and San Francisco-based real estate law firm Swedelson Gottlieb, said that co-ops generally “fly by the same rules” as other community associations, but added that there are differences: In contrast to homeowners associations that commonly govern condo buildings where owners own a separate interest in the building, a co-op building and all of the units in it are owned by the association. Occupants are “shareholders” who buy in and are subject to an occupancy agreement that Koochek described as sharing similarities with a lease agreement.

Another difference between co-ops and other community associations is “this issue of rejection of potential shareholders” Koochek said, which he described as a controversial topic that is not specifically addressed by governing state laws.

“The general rule of thumb is that the co-op can reject a potential shareholder for discretionary purposes, and most of the time, it’s for a financial reason,” he said. “But the one thing that has to be understood is that California has fair housing laws, and there’s federal fair housing law. And if it can be determined that there’s anything discriminatory, based on a protected class, that would not be legal.”

Koochek said that California has a host of protected class distinctions, including members of a certain race, sex, religion and so on. But, “political affiliation” is not on that list, he said.

However, he said, whether the board’s rejection of the unit’s sale to Powell was based on reasons that could qualify under the protected class distinction, will be determined in the legal process.

(http://www.autoadmit.com/thread.php?thread_id=5684996&forum_id=2...id.#48688313)