Executives step down as crypto firms feel pinched

CEO exodus: A number of crypto CEOs stepped down from their roles in recent weeks. This has caused companies to look for new talent elsewhere, or from within.

The bear market and an economic recession appear to be 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 broke Celsius Network and Brett Harrison, president of FTX US

Perhaps the most notable resignation was that of MicroStrategy’s Michael Saylor, a staunch Bitcoin advocate. The news came as the firm reported a loss of $1.06 billion in the second quarter. This is largely due to a write-down of $917 million based on the value of BTC holdings.

CEO exodus: Leaving the jobs they love

All CEOs gave different reasons for leaving the jobs they once loved, positions they held for many years. Mashinsky regrets running the company into the ground, cratering the company’s balance sheet to the tune of $1.2 billion. As CEO, he has become a “distraction”, he says.

Trabucco was stressed, “needed to relax and prioritize other things.” As for Powell, he didn’t see the “fun” in running an oversized company he co-founded eleven years ago. “It’s just gotten more tiring for me,” he moaned.

Moro paid the price for Genesis’ $2.4 billion exposure to Three Arrows Capital (3AC), the failed crypto hedge fund. Along with Celsius and Voyager Digital, it became one of the biggest victims 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. Apart from praising himself for increasing FTX US employees from three to 100, “working together to build a nascent crypto exchange into a multi-business enterprise.”

Changing market conditions

Whatever the reasons, the high-profile CEO turnover shows that market conditions in crypto are changing, according to analysts. Profits have decreased and cash flows are thin due to the bear market in 2022. It is a downturn like never before, characterized by war, high inflation and fleeing founders.

Both the dismissal of Genesis’ Moro and Celsius’ Mashinsky are the result of decisions made in the past, at the height of the bull market. The reassignment of Saylor to executive chairman has also been thought of in this way.

The new CEO will focus on MicroStrategy’s core mobile software business. The company’s shift away from Bitcoin has been seen by some as an admission of regret over the company’s previous involvement with the cryptocurrency.

“While the bear market may be the root cause, directors like Mashinsky quit as a result of falling bankruptcies, lawsuits and outright violations of financial laws,” Alex Malkov, co-founder of Islamic Coin, told Be.[In]Crypto.

“The close attention of financial watchdogs, as well as legislative activity, is causing many senior executives to reconsider their actions. The bearish trend has also cut salary privileges that are common for major crypto companies in recent times.”

CEO exodus and regulation

Governments began tightening 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 principle in the crypto industry. For platforms like Kraken, prioritizing decentralization means challenging existing regulatory frameworks that entrench power in central authorities such as governments.

Jesse Powell, a Bitcoin fundamentalist who champions the ethos of privacy and individual liberty, may have backed out of this account, worried about bowing to regulatory demands.

He told Fortune that he wanted to spend “more time on things … like working on product and industry advocacy.” The founder refused to block Russian-linked accounts unless forced to do so by law.

Brett Harrison, the former US FTX president, summed up the regulatory dilemma. He tired in his dismissal noted 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 cryptoanalyst and co-founder of blockchain firm T7T Labs, believes there are several ways to look at the CEO’s turnover. But he doesn’t think “we should imply” any significant significance to recent events.

“I think most crypto CEO departures are related to ‘The Great Resignation’ trend and not to anything crypto-specific,” Keff told Be.[In]Crypto. He was referring to a wave of employee layoffs during the pandemic, which became known as “The Great Layoff.”

Keff drew on a report from the accounting firm Deloitte to support his theory. The report found that about “70% of business leaders in every industry are seriously considering leaving for a job that better supports their well-being.”

“As the crypto market grows rapidly, crypto CEOs will have a tough job to do in leading their companies. It is natural that some CEOs prefer to step aside, especially if they have already been in the leadership role for many years,” he added .

Where further?

Harrison will continue to work in the industry to remove “technological barriers to the full participation and maturation of global crypto markets.” Sam Trabucco will spend more time with his family and Powell will continue as chairman of Kraken.

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