The cryptocurrency industry is undergoing a major shakeout, with thousands of jobs lost and consolidation taking place. This is now reaching the corner office, with senior executives being affected.
Kraken, a cryptocurrency exchange, announced on Wednesday that co-founder Jesse Powell will step down as CEO and be replaced by Chief Operating Officer David Ripley. The change comes shortly after Genesis's Michael Moro and Bitcoin evangelist Michael Saylor, along with Sam Trabucco of Alameda Research, gave up their top positions.
The recent spate of successions is setting the stage for a changing of the guard in the roughly decade-old cryptocurrency industry. Many of crypto's most prominent leaders, like Powell, are technologists who discovered digital assets early, cultivated devout Twitter followings, and didn't hesitate to engage their detractors in online battles. With the sector reeling from a slump that has shaved off roughly $2 trillion from cryptocurrencies' market value and landed some bosses in bankruptcy court, regulators' cross-hairs, or worse, boards are starting to look for different skills.
According to Deepali Vyas of Korn Ferry, if a company is in complete crisis, they need an adult in the room who understands regulation and compliance.
Vyas is currently looking for CEOs for a crypto exchange and a crypto miner. She expects more C-suite changes throughout the industry in the fall.
This wave of changes started in earnest in early August with Saylor giving up his CEO title to focus more on Bitcoin. Two weeks later, Moro stepped down as CEO of Genesis.
On August 24, Alameda co-CEO Trabucco announced that he was stepping down to "prioritize other things." Insiders are taking over at MicroStrategy and Alameda, while Genesis appointed Chief Operating Officer Derar Islim as interim CEO while it searches for a permanent replacement.
Digital currencies are facing another test as prices plunge and investors lose faith in the asset class.The so-called crypto winter has seen prices of major digital currencies such as Bitcoin and Ethereum fall sharply from their highs in late 2017 and early 2018.The current slump is testing the resilience of the young asset class and its ability to attract new investors and survive periods of prolonged market weakness.So far, the digital currency market has weathered the storm and continues to attract new participants. But the long-term viability of the asset class remains an open question.
Alameda Co-CEO John Trabucco has stepped down from his position at the crypto trading firm. In a statement, Trabucco said that he believes the company is well-positioned for success and that he is proud of the progress it has made. He will continue to serve on the board of directors.
Powell said that his decision to step down from Kraken was more than a year in the making. He explained that part of the reason for his decision was a desire to deal with personal matters. Powell stated that he plans to devote approximately 40 hours per week to Kraken, as opposed to the 80 hours per week he was previously working. He also said that he will focus more on products and advocacy, and less on management.
Powell stated that this will enable her to invest more time in the areas she enjoys and is strongest in, rather than managing a large team, which she doesn't take pleasure in.
In June, the New York Times published an article that said Powell had "ignited a culture war" among Kraken's employees through comments some saw as "hurtful." On June 15, the day the Times's story ran, Powell published a Twitter thread in which he said that about 20 Kraken workers were "totally not on board" with its corporate culture. There are risks associated with replacing founders.
"Crypto leaders tend to have a great ability to influence their communities and engage developers," said Stefan Cohen, a partner at Bain Capital Crypto. "This is extremely important in the crypto world, as it can be very difficult to replace these key players. Additionally, I don't think most people would even want to replace them."
Cohen said that most crypto board members and investors are used to the volatile nature of the asset class, and so they are less likely to blame management during a "down cycle."
Cryptocurrency is evolving in ways that are likely to result in further changes in the top ranks of companies. After a series of market disasters ranging from the collapse of a major stablecoin in May to the bankruptcy of several crypto lenders around the world in the following months, regulators are determined to tame the industry and prevent what they see as potential risks to the wider financial system.
The stablecoin market is worth $150 billion, and regulators are cracking down on it. Cryptocurrencies like Tether and USD Coin are facing increased scrutiny from authorities, who are concerned about their lack of transparency and potential for manipulation. This crackdown could have a major impact on the stablecoin market, and it remains to be seen how it will play out.
Some crypto CEOs who are facing regulatory action are also facing pressure from their shareholders. In August, Bloomberg reported that some investors in Zipmex Pte, the crypto exchange against which Thailand's securities regulator had filed a police complaint, were urging CEO Marcus Lim to step down.
The central bankers' efforts to tighten monetary policy have set in motion the collapse in digital-asset prices that laid bare much of the industry's hidden risks. This has been a big overhang not just for crypto, but for all global markets. The central bankers were arguably late in identifying persistent global inflation, but they are now moving fast to make sure it doesn't become too entrenched.
The Fed raised interest rates by 75 basis points on Wednesday, signaling its commitment to fighting inflation. This latest move by the central bank is likely to keep rates high in the near future.
Korn Ferry's Vyas stated that due to the recent market volatility and macroeconomic conditions, many people are choosing to exit the market.
Binance Holdings Ltd., operator of the world's biggest crypto exchange, is looking for a new CEO. This is a great opportunity for someone with experience in the financial sector.
Binance's CEO and co-founder Changpeng "CZ" Zhao has indicated that he may step aside within five years to become chairman. In a July podcast with Bankless, Zhao said that he doesn't think a CEO should be in the position for more than 10 years. He added that he plans to retire sometime between now and five years from now.
A Binance spokesperson told Bloomberg News that CZ believes strongly in the importance of fresh ideas for top leadership, and that succession planning and a robust cadre of top leaders is something that has always been a priority for Binance. The exchange has had training programs and strategies in place to support this from the very beginning.
When asked about Coinbase Global Inc. CEO Brian Armstrong's succession plan, a spokesperson for the crypto exchange pointed to the company's April proxy statement. The statement says that the board's nominating and corporate governance committee, consisting of venture-capital luminaries Katie Haun, Fred Wilson and Marc Andreessen, regularly evaluates succession planning for senior positions, including the CEO.
When asked about succession plans for CEO Sam Bankman-Fried, FTX declined to comment. This leaves the question of who will lead the company if something happens to Bankman-Fried up in the air.
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