beincrypto.com
CEO exodus: A number of crypto CEOs stepped down from their roles in recent weeks. This has prompted companies to look for new talent elsewhere, or from within.
The bear market and an economic recession seems well underway. At least six CEOs have left their jobs since August. These include Michael Moro of Genesis Trading, Sam Trabucco of digital asset trading firm Alameda Research, Jesse Powell of crypto exchange Kraken, Alex Mashinsky of brankrupt Celsius Network, and Brett Harrison, president of FTX U.S.
Perhaps the most notable resignation was that of MicroStrategy’s Michael Saylor, a staunch Bitcoin advocate. The news came as the firm reported a second-quarter loss of $1.06 billion. This is largely due to an impairment charge of $917 million based on the value of its BTC holdings.
CEO exodus: Leaving the jobs they love
All CEOs gave different reasons for quitting the jobs they once loved, positions they held for many years. Mashinsky regrets running the company into the ground, cratering the firm’s balance sheet to the tune of $1.2 billion. As CEO, he’s become a “distraction,” he says.
Trabucco was stressed out, “needed to relax and prioritize other things.” As for Powell, he did not see the “fun” in running an outsized company he co-founded eleven years ago. “It’s just gotten to be more draining on me,” he moaned.
Moro paid the price for Genesis’ $2.4 billion exposure to Three Arrows Capital (3AC), the failed crypto hedge fund. Together with Celsius and Voyager Digital, it became one of the biggest casualties of the credit contagion from TerraUSD’s $40 billion collapse in May.
Harrison never quite explained the reasons behind his unexpected departure after just over a year at the helm. Except to praise himself for growing FTX U.S. employees from three to 100, “working together to build a nascent crypto exchange into a multi-business enterprise.”
Changing market conditions
Whatever their reasons, the high-profile CEO turnover shows that market conditions in crypto are changing, according to analysts. Profits have tanked and cashflows are thin due to the 2022 bear market. It is a downturn like never before, marked by war, high inflation and fugitive founders.
Both the resignation of Genesis’ Moro and Celsius’ Mashinsky are a result of decisions made in the past, at peak bull market hype. The reassignment of Saylor to executive chairman has been thought of in this way, too.
The new CEO will refocus on MicroStrategy’s core business of mobile software. The company’s shift away from Bitcoin has been seen by some as an admission of regret over the company’s past involvement with the cryptocurrency.
“While the bear market can be the root cause, directors such as Mashinsky left as a result of cascading bankruptcies, lawsuits, and outright violations of financial laws,” Alex Malkov, co-counder of Islamic Coin, told Be[In]Crypto.
“The close attention of financial watchdogs, as well as legislative activity, make many top managers reevaluate their actions. The bearish trend has also cut salary privileges customary for large crypto companies in recent times.”
CEO exodus and regulation
Governments began to tighten crypto regulation after the spectacular collapse of the Terra blockchain in May. It has become clear that the industry is entering a new phase, one that involves direct intervention from regulators.
Decentralization is a key tenet of the crypto industry. For platforms like Kraken, prioritizing decentralization means challenging existing regulatory frameworks that entrench power in central authorities like governments.
Jesse Powell, a Bitcoin fundamentalist who champions the ethos of privacy and individual freedom, may have resigned on this account, worried about bending to regulatory demands.
He told Fortune that he wanted to spend “more time on stuff…like working on product and industry advocacy.” The founder refused to block Russian-linked accounts unless compelled by the law to do so.
Brett Harrison, the former FTX U.S. president, summed up the regulatory dilemma. He stated in his resignation notice that the crypto industry was at “a number of crossroads.” But he was more concerned about the arrival of what he called “larger market participants.”
The Great Resignation
Vadim Keff, a crypto analyst and co-founder of blockchain firm T7T Labs, believes there are several ways to look at the CEO turnover. But he does not think “we should imply” any significant meaning to recent events.
“I think that most crypto CEO departures are linked to ‘The Great Resignation’ trend and not to anything crypto specific,” Keff told Be[In]Crypto. He was referring to a wave of resignations by employees during the pandemic, that became known as “The Great Resignation.”
Keff pulled a report by accounting firm Deloitte to support his theory. The report showed that around “70% of company leaders in any industry are seriously considering quitting for a job that better supports their well-being.”
“As the crypto market is rapidly growing, crypto CEOs will have a tough job to do in leading their companies. It is natural that some CEOs would prefer to step aside especially if they have already been in the managing role for many years,” he added.
Where to next?
Harrison will continue to work in the industry to remove “technological barriers to full participation in and maturation of global crypto markets.” Sam Trabucco will be spending more time his family and Powell will stay on as Kraken board chair.