The epic upheaval in the cryptocurrency industry, which has cost thousands of jobs and sparked a consolidation cycle, is reaching the office around the corner.
The epic upheaval in the cryptocurrency industry, which has cost thousands of jobs and sparked a consolidation cycle, is reaching the office around the corner. Crypto exchange Kraken announced on Wednesday that co-founder Jesse Powell will step down as CEO, to be replaced by chief operating officer David Ripley. The shakeup comes shortly after Genesis’ Michael Moro and Bitcoin evangelist Michael Saylor, along with Alameda Research’s Sam Trabucco, stepped down from leadership positions.
The raft of successions sets the stage for a changing of the guard in the decade-old industry. Many of crypto’s most prominent leaders, like Powell, are technologists who discovered digital assets early on, cultivated fervent Twitter followers, and didn’t shy away from engaging their critics in online battles. As the industry reels from a meltdown that has slashed an estimated $2 trillion from the market value of cryptocurrencies and landed some bosses in bankruptcy court, regulators’ crosshairs or worse, boards are starting to look for different skills.
“If there’s a business in the midst of crisis and collapse, you need an adult in the room, and you need that adult in the room to understand regulation and compliance,” said Deepali Vyas, who leads executive search for areas such as cryptography at Korn Ferry. .
Vyas is currently looking for CEOs for a crypto exchange and a crypto miner she declined to identify, and she expects more industry-wide C-suite changes to come. autumn.
Insiders take over
This wave of change began in earnest in early August with Saylor, who founded MicroStrategy in 1989, stepping away from his CEO title to focus more on Bitcoin – even after his purchase of the token resulted in a $918 million impairment charge at the time. second trimester. Two weeks later, Moro resigned as CEO of Genesis, the crypto brokerage stung by exposure to defunct hedge fund Three Arrows Capital.
On August 24, Alameda co-CEO Trabucco announced he was stepping down to “prioritize other things.” As at Kraken, insiders are taking over at MicroStrategy and Alameda, while Genesis has named COO Derar Islim as interim CEO while it searches for a permanent replacement.
Powell, 42, said his decision to quit took more than a year and was partly motivated by a desire to take care of “personal matters”. He plans to spend “maybe 40 hours a week instead of 80 hours” on Kraken, he said in an interview, adding that he would focus more on product and advocacy and less on management.
“It will allow me to have more time to work on the things that I really love doing and where I’m strongest,” Powell said. “And not doing the things that I really don’t like, which is managing a huge team.”
In June, the New York Times published an article that Powell had “ignited a culture war” among Kraken employees with comments that some considered “hurtful.” On June 15, the day the Times story was published, Powell posted a Twitter thread that said, among other things, that about 20 Kraken employees “totally disagree” with his culture of company.
Replacing founders comes with its own set of risks.
“They tend to have this incredible ability to influence the community or engage developers. That’s very important in crypto,” said Stefan Cohen, partner at Bain Capital Crypto, an investment fund focused on crypto projects. early-stage protocol and investor in BlockFi and MakerDAO “It’s very hard to get these people out and I don’t think you would really want to.”
Most crypto board members and investors are used to the volatile nature of the asset class and therefore tend to be less inclined to blame management in a “down cycle,” Cohen said.
That said, crypto is evolving in a way that will likely lead to further changes in the upper ranks of companies. After market calamities ranging from the implosion 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 anticipate what they perceive as potential risks to the broader financial system.
Crypto rules crackdown looms for $150 billion stable market
Already, some crypto CEOs facing regulatory action are facing wayward shareholders. Some investors in Zipmex Pte, the crypto exchange against which Thailand’s securities regulator filed a police complaint, urged CEO Marcus Lim to pull out, Bloomberg reported in August.
Threat to monetary policy
Add to that the biggest overhang not just for crypto, but for all global markets: Federal Reserve-led central bankers who were arguably slow to identify lingering global inflation and are now moving quickly to ensure that it does not take root too much. Their efforts to tighten monetary policy triggered the digital asset price crash that laid bare much of the industry’s hidden risks.
The Fed’s latest salvo came on Wednesday. The US central bank raised its benchmark interest rates by 75 basis points and signaled no relaxation in its fight against inflation.
“With the extreme volatility in the market and what’s happened over the past few months, and given the impending macroeconomic conditions, this is a time when you see a lot of exits,” Korn Ferry’s Vyas said.
A job that may need to be done in the next few years: running Binance Holdings Ltd., operator of the world’s largest crypto exchange.
Binance’s billionaire CEO and co-founder Changpeng “CZ” Zhao has indicated he could step down within five years to become chairman. “I’ve been CEO of Binance for five years. I don’t think a CEO should be more than 10 years old,” Zhao said during a July podcast with Bankless. “So I think between now and five years later, I should retire.”
A Binance spokesperson told Bloomberg News that Zhao “strongly believes that new ideas, especially for senior leaders, are essential” and “succession planning and a strong cadre of senior leaders is something CZ has always kept it as a priority and Binance has had training programs and strategies around this from the beginning.
Asked about the succession plan for Coinbase Global Inc. CEO Brian Armstrong, a spokesperson for the crypto exchange pointed to the company’s April proxy statement, which states that the Nominating and Governance Committee board of directors – made up of venture capital luminaries Katie Haun, Fred Wilson and Marc Andreessen – regularly assesses succession planning for senior positions, including the CEO.
FTX declined to comment on CEO Sam Bankman-Fried’s succession plans.