Crypto Shakeout Engulfs the C-Suite as CEOs Start Stepping Down

(Bloomberg) – The epic purge of the cryptocurrency industry that has cost thousands of jobs and sparked a round of consolidation is reaching the corner office.

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Crypto exchange Kraken announced on Wednesday that co-founder Jesse Powell is stepping down as CEO and being replaced by chief operating officer David Ripley. The reshuffle comes shortly after Genesis’ Michael Moro and Bitcoin evangelist Michael Saylor, along with Alameda Research’s Sam Trabucco, relinquished top positions.

The flood of successors paves the way for a change of guard in the industry, which is around ten years old. Many of crypto’s most prominent leaders, like Powell, are technologists who discovered digital assets early, cultivated devout Twitter followers, and weren’t hesitant to engage their critics in online battles. As the sector is rocked by a slump that has eroded around $2 trillion from cryptocurrency’s market value and left some bosses in bankruptcy court, in the crosshairs of regulators, or worse, boards are starting to look for other skills.

“When a firm is in complete 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 is leading the search for areas like Krypto leads at Korn Ferry.

Vyas is currently looking for CEOs for a crypto exchange and a crypto miner, which she declined to name, and she expects more C-suite changes across the industry in the fall.

insiders take over

This wave of change began in earnest in early August, when Saylor, who founded MicroStrategy in 1989, gave up his CEO title to focus more on bitcoin — even after his purchase of the token resulted in a $918 million depreciation in the second quarter would have. Two weeks later, Moro resigned as CEO of Genesis, the crypto brokerage firm hurt by exposure to defunct hedge fund Three Arrows Capital.

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On Aug. 24, Trabucco, Alameda’s co-CEO, announced that he was stepping down to “make other things a priority.” As with Kraken, insiders are taking over at MicroStrategy and Alameda, while Genesis named chief operating officer Derar Islam as interim CEO while a permanent replacement is sought.

Powell, 42, said his decision to step down was more than a year in the making and was partly driven by a desire to deal with “personal matters”. He plans to dedicate “maybe 40 hours a week instead of 80 hours a week” to Kraken, he said in an interview, adding that he will focus more on products and advocacy and less on management.

“It gives me more time to work on the things I really love to do and where I’m strongest,” Powell said. “And not doing the things I really don’t enjoy, which is managing a huge team.”

Founder Influencer

In June, The New York Times ran an article that said Powell had sparked “a culture war” among Kraken’s employees by making comments that some found “hurtful.” On June 15, the day the Times story appeared, Powell posted a Twitter thread that said, among other things, that about 20 Kraken workers were “completely not on board” with the company’s culture.

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The exchange of founders carries its own risks.

“They usually have this incredible ability to influence the community or hire developers. That’s very important in crypto,” said Stefan Cohen, a partner at Bain Capital Crypto, an investment fund focused on early-stage protocol projects and investing in BlockFi and MakerDAO. “It’s very hard to get these people out and I don’t think you would really want that.”

Most crypto board members and investors are used to the volatility of the asset class and are therefore less inclined to blame management in a “downturn,” Cohen said.

However, crypto is changing in ways that are likely to lead to further changes in corporate top positions. After market disasters 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 forestall potential risks to the entire financial system.

Crypto Rules Crackdown for the $150 Billion Stablecoin Market

Add to that the biggest overhang not just for crypto, but for all global markets: central bankers, led by the Federal Reserve, who were arguably late in recognizing persistent global inflation and are now acting quickly to ensure it doesn’t become too entrenched . Their efforts to tighten monetary policy have ignited the collapse in digital asset prices, which has exposed much of the industry’s hidden risks.

The Fed’s last salvo came on Wednesday. The US Federal Reserve hiked interest rates by 75 basis points, signaling that its fight against inflation would not let up.

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“Given the extreme market volatility and what has happened over the last few months, as well as the macroeconomic conditions that are emerging, this is a time when you are seeing a lot of exits,” Korn Ferry’s Vyas said.

A job that may need to be filled in the next few years: running Binance Holdings Ltd., the operator of the world’s largest crypto exchange.

Binance’s billionaire CEO and co-founder, Changpeng “CZ” Zhao, has hinted that he could step down to become chairman within five years. “I’ve been CEO of Binance for five years. I don’t think a CEO should last more than 10 years,” Zhao said on a podcast with Bankless in July. “So I think I should retire somewhere between now and five years later.”

A Binance spokesperson told Bloomberg News that Zhao “strongly believes that fresh ideas, especially for top executives, are essential” and “succession planning and a robust cadre of top executives is something CZ always considers a priority and Binance had training programs and strategies from the start.”

When asked about Coinbase Global Inc. CEO Brian Armstrong’s succession plan, a spokesman for the crypto exchange referred to the company’s April proxy statement covering the board’s nominating and corporate governance committee — comprised of the venture Capital luminaries Katie Haun, Fred Wilson and Marc Andreessen – regularly assesses succession planning for senior positions, including CEO.

FTX declined to comment on succession plans for CEO Sam Bankman-Fried.

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