C-Suite Shakeout Engulfs Crypto as CEOs Start Resigning

The massive shakeout of the bitcoin sector is now nearing the corner office, having destroyed thousands of jobs and sparked a round of consolidation.

David Ripley, the chief operating officer, will take over as CEO from co-founder Jesse Powell, according to a statement released on Wednesday by the cryptocurrency exchange Kraken. The changes follow the recent resignation of Sam Trabucco of Alameda Research, Michael Moro of Genesis, and Michael Saylor, a proponent of Bitcoin.

The several successions pave the way for a change of leadership in the roughly ten-year-old sector. Like Powell, many of crypto’s most well-known leaders are engineers who were early adopters of digital assets, had devoted Twitter followings, and weren’t afraid to engage with critics in online debates.

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Boards are beginning to search for other abilities as the industry struggles to recover from a downturn that has reduced the market value of cryptocurrencies by almost $2 trillion and put some executives in bankruptcy court, the crosshairs of regulators, or worse.

“You need an adult in the room if there is a corporation in utter crisis and meltdown, and you need that adult to understand regulatory and compliance,” said Deepali Vyas, who oversees executive search at Korn Ferry for industries like cryptocurrency.

Vyas is now seeking CEOs for a cryptocurrency exchange and a miner, both of which she refuses to name, and she anticipates more C-suite changes in the business in the coming months.

Insiders Take Over

This wave of changes began in earnest in early August when Saylor, who established MicroStrategy in 1989, resigned as CEO to concentrate more on Bitcoin — despite the fact that his purchase of the currency resulted in an impairment charge of $918 million in the second quarter. Two weeks later, Moro, the cryptocurrency brokerage hurt by exposure to the now-defunct hedge fund Three Arrows Capital, resigned as CEO of Genesis.

Alameda co-CEO Trabucco announced his resignation on August 24 in order to “prioritise other things.” While Genesis named Chief Operating Officer Derar Islim as temporary CEO while looking for a permanent successor, insiders are taking control at MicroStrategy and Alameda, similar to what happened at Kraken.

Powell, 42, said that his decision to resign had been in the works for more than a year and was motivated in part by a need to attend to “personal things.” In an interview, he stated that he intended to commit “maybe 40 hours a week instead of 80 hours” to Kraken, adding that he would concentrate more on the company’s products and advocacy than administration.

Powell remarked, “This will give me more time to focus on the areas that I truly like and where I’m strongest. “And not do the things that I actually don’t love, like managing a big staff,” she continued.

Founder-Influencers

According to a June New York Times article, Powell “ignited a cultural war” among Kraken’s workers with remarks some perceived as “hurtful.” On June 15, the day the Times’ article appeared, Powell posted a thread on Twitter in which, among other things, he claimed that 20 employees of Kraken were “completely not on board” with the company’s corporate culture.

There are dangers associated with replacing founders. “They frequently possess a remarkable capacity to engage developers or influence the community. That is crucial in the world of cryptocurrency, according to Stefan Cohen, a partner at Bain Capital Crypto, a firm that invests in BlockFi and MakerDAO and focuses on early-stage protocol innovations. “I don’t believe you’d really want to transfer these folks out; it’s really difficult to do so.”

Zhao Changpeng

The majority of cryptocurrency board members and investors are accustomed to the erratic character of the asset class and are thus less likely to hold management accountable during a “down cycle,” according to Cohen.

Nevertheless, the cryptocurrency industry is evolving in ways that suggest significant changes to the top management positions at organisations.

Regulators are determined to control the industry and avert what they see as potential risks to the larger financial system after a string of market catastrophes, including the collapse of a significant stablecoin in May and the bankruptcy of several crypto lenders globally in the months that followed.

Crackdown on Crypto Rules to Impact the $150 Billion Stablecoin Market

The largest threat to global markets in general, not just cryptocurrency, is central bankers, led by the Federal Reserve, who may have been slow to recognise chronic global inflation but are now acting quickly to prevent it from becoming too entrenched. The decline in the value of digital assets that resulted from their efforts to tighten monetary policy exposed many of the industry’s covert vulnerabilities.

The Fed’s most recent attack came on Wednesday. The US central bank increased the benchmark rate by 75 basis points while indicating that it will continue to fight against inflation.

This is a period when you’re seeing a lot of departures, according to Vyas of Korn Ferry. “Given the extraordinary market volatility and what has transpired over the previous few months, and given the approaching macroeconomic conditions,” he said.

Running Binance Holdings Ltd., the company that runs the biggest cryptocurrency exchange in the world, is one position that may need to be filled in the coming years.

Changpeng “CZ” Zhao, the billionaire CEO and co-founder of Binance, has hinted that he would stand down in the next five years to take on the role of chairman. “I’ve led Binance as CEO for five years. A CEO shouldn’t have a tenure of more than ten years, Zhao remarked in a podcast with Bankless in July. “I thus believe that I should retire between now and five years from now.”

Zhao “believes strongly that fresh ideas, especially for top leadership, is essential,” a Binance spokesperson told Bloomberg News. “Succession planning and a robust cadre of top leaders is something that CZ has always kept as a priority, and Binance has had training programmes and strategies around this since the beginning,” the spokesperson added.

When asked about Brian Armstrong, CEO of Coinbase Global Inc., the company’s spokesperson cited the company’s April proxy statement, which stated that the board’s nominating and corporate governance committee, which is made up of venture capitalists Katie Haun, Fred Wilson, and Marc Andreessen, regularly assesses succession planning for senior positions, including the CEO.

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