Crypto crash causes major damage among CEOs
The damage caused by the crash in the cryptocurrency market will not be measurable for a long time.
Digital currency rates have crashed from their peaks in November, wiping out nearly $2.4 trillion, according to data firm CoinGecko.
Bitcoin, the most popular cryptocurrency, has lost nearly three-quarters (73%) of its value since hitting a record high of $69,077.44 on November 10. Likewise, ether, the second cryptocurrency by market cap, is down 74% from a high of $4,878.26 .
The list of victims from this disaster is long: many retail investors have lost much or most of their savings. Prominent crypto firms around the world have filed for bankruptcy, while big names in business have booked hundreds of millions of dollars in write-down charges.
Wave of departures
Thousands of jobs in the sector have been eliminated or frozen. The crypto space, which has required clear regulation, is now clearly on the radar screen of the authorities. They see crypto crashes as a signal that the young industry threatens the stability of the traditional financial system.
“Outright fraud, fraud and theft in digital asset markets is on the rise: according to FBI statistics, reported financial losses from digital asset fraud were nearly 600% higher in 2021 than the previous year,” the Biden administration said in its latest first-ever comprehensive framework to regulate the crypto industry.
Another set of crypto crash victims, however, has received little notice: the CEOs and founders, who in crypto are often one and the same.
A number of major crypto players were founded after 2009, when bitcoin was created. They often have similar backgrounds: They were in technology and were among the first to jump on the cryptocurrency bandwagon.
Since the summer, founding CEOs have given up their duties as CEOs.
The latest to let go of the operational reins is Jesse Powell, co-founder of the Kraken cryptocurrency trading platform. Powell will become chairman and will be succeeded by an insider, Dave Ripley, who is currently CEO.
“We are grateful for Jesse’s leadership, as well as his dedication to cryptocurrencies and Kraken’s mission over the past 11 years,” Kraken said in a statement. “We are thrilled to have Dave as our new CEO as we embark on our second decade of growth and global adoption.”
The platform added that a new era in its young history opened:
“Over the past 11 years, Kraken has evolved from a bitcoin exchange to a diverse crypto platform. Our products include a comprehensive suite of trading tools and educational resources, industry-leading betting services, futures trading and an OTC desk. Kraken is launching soon. Its own [nonfungible-tokens] marketplace.”
Saylor and others
Before Powell, billionaire Michael Saylor, one of bitcoin’s most prominent evangelists, resigned as CEO of software company MicroStrategy (MSTR) early August.
Saylor, who co-founded the firm in 1989, will become chairman and will focus more specifically on bitcoin, whose falling prices prompted MicroStrategy to record a $2 billion write-down in the second quarter.
The CEO continued with the departure of Michael Moro from crypto brokerage Genesis, and the resignation of Sam Trabucco, co-CEO of Alameda Research.
CEOs of crypto firms are also increasingly criticized by small investors. These include Alex Mashinsky, founding CEO of bankrupt crypto lender Celsius Network, as well as Stephen Ehrlich, CEO of bankrupt exchange platform Voyager Digital.
Celsius and Voyager filed for Chapter 11 bankruptcy over their exposure to crypto hedge fund Three Arrows Capital, or 3AC, which was forced into liquidation after losing hundreds of millions of dollars in the May crash of sister cryptocurrencies Luna and UST.
Ehrlich is named in a lawsuit filed in August by investors who lost money in the bankruptcy of Voyager Digital. These investors claim that he and billionaire Mark Cuban “[induced] them to invest in the deceptive Voyager platform.”
Mashinsky has come in for particular criticism on crypto forums on social networks such as Reddit.
