Jesse Powell of Kraken joins ‘crypto’ CEO skedaddle
Jesse Powell, the controversial co-founder of the Kraken digital asset exchange, is the latest “crypto” boss to surrender the reins of power as market think tanks and authorities investigate financial wrongdoing.
On Wednesday, Kraken announced a “leadership succession plan” that will see Powell step down as CEO to make way for David Ripley, the company’s CEO for the past six years. Ripley will assume the CEO role once a replacement COO is identified, a process expected to take a few months.
Powell expressed “great confidence” in Ripley’s ability “to lead Kraken through its next era of growth.” Ripley logged back and said “my vision, along with the rest of the leadership team, is in lockstep with Jesse’s – to accelerate the adoption of cryptocurrency.”
Kraken quoted Powell as saying he was looking forward to spending more time subverting the authority of government everywhere to fulfill his lifelong anarchic fantasies, er, sorry, make it “spend more of my time on the company’s products, user experience and broader industry advocacy ».
Then again, Powell (seriously) tweeted that he might consider filling his spare time by running for governor of California, possibly because he is past proposed governors should be paid the same as CEOs of Amazon or Google. Also possibly because Powell tweeted in May that he had “used half of my available capital to buy BTC for $30ki July [2021]so you know, sucking the public teat suddenly looks a lot more appealing.
Fittingly, Powell’s resignation was announced on the day when the value of the BTC token fell below $18,300, only slightly higher than 2022’s previous low in June. The broader crypto market was hit hard on Wednesday after the US Federal Reserve—a longtime enemy of Powell (and currently chaired by another J. Powell) – raised interest rates to 3.25%. But remember kids, BTC is freedom money, even if its value can be decimated periodically by the whims of central bankers.
BTC maxis just want to have fun
Powell was more candid about the reasons for his exit in an interview with Bloomberg, saying that as Kraken’s payroll grew to about 3,300 bodies, “it’s just become more tiring for me, less fun.” Especially when some of the employees do not share the desire to be insulted daily by the so-called Kraken culture.
To label Powell’s views as controversial is a serious understatement, at least for anyone who hasn’t partaken of the Kraken Kool-Aid. Powell seems to have set out to surround himself with free thinkers, in that everyone on Kraken is free to think just as Powell does. Those who don’t are free to think about leaving.
Powell claimed that he had privately informed Kraken’s board of his intention to step down as CEO over a year ago, around the time he publicly mulled taking Kraken public in 2022. But then the market rallied, competing with Coinbase’s share price. went along with it, erasing around three-quarters of its market value.
Powell told Bloomberg that an IPO was still possible, but gave no details on when the illustrious founder’s pay might come. Kraken’s delay in following Coinbase to Nasdaq has likely taken some of the bloom off the rose, as Kraken has lost significant market share to its rivals during this period.
Powell’s exit from a day-to-day operational role at Kraken may also be intended to ease institutional investors’ concerns about the confrontational attitudes of regulators, government officials and other authorities that routinely emerge from Powell’s Twitter feed. Then again, the fact that Ripley has declared that his “vision” is identical to Powell’s may not do much to alleviate these concerns.
The last one out of the pool has to kiss Craig
Powell is the latest in a growing line of CEOs to head for the hills this crypto winter. Jack Dorsey quit Twitter last November and left the board in May – despite/because of the social media platform’s major security issues – to concentrate on his BTC-focused payment processor Block (formerly Square). Not that it helped. Last month, Block was hit with a class action lawsuit after a former employee was able to steal 8.2 million users’ data after they left the company.
Block is currently trading around $56, about a fifth of its value just a year ago. This week, investment bank Mizuho downgraded Block’s rating, citing “user fatigue” and the fact that BTC’s daily struggle “seems to disproportionately occupy management’s attention.”
More recently, Sam Trabucco, co-CEO of FTX market maker Alameda Research, announced his resignation in August, claiming he would spend more time relaxing on his new boat. Caroline Ellison, Alameda’s other co-CEO, is now solo steering the ship Trabucco has left.
Trabucco’s sail into the sunset came as the spotlight intensifies on Alameda’s outsized role in the ongoing Tether scandal. Alameda is the single largest recipient of the allegedly unbacked USDT stablecoin (which is linked to artificial inflation of BTC), and Alameda sent 82% of that $36.7 billion to FTX.
(Speaking of FTX, the supposedly wildly profitable exchange is again looking to raise another billion dollars from venture capital funds instead of dipping into its own reserves, almost as if those profits were vastly overstated and the reserves non-existent. But we digress from … )
Michael Moro, CEO of Digital Currency Group-owned Genesis Global Trading, fled the crypto scene in August after making $2.36 billion in ill-advised loans to Three Arrows Capital, the hedge fund whose collapse this summer helped create an inferno of associated insolvencies.
Moro’s CEO seat is being held on an interim basis by COO Derar Islim while the search for a permanent successor continues. Genesis stated the obvious by declaring that future hires would focus on “strengthening the company’s overall risk management.”
Finally, MicroStrategy’s Michael Saylor resigned as CEO in August after his company posted a net loss of over $1 billion due to Saylor’s big bad bet that BTC’s numbers would go up forever. Like Powell, Saylor chose to stay on as chairman while asserting plans to engage in BTC-related “advocacy”.
Just days after Saylor’s resignation, he was sued for tax fraud by the District of Columbia Attorney General’s office. Presumably, Saylor understood that the legal ax was about to fall before he pulled the plug.
Do you sense a pattern here? Incompetence? Mismanagement? Crime? Read more…
Like Saylor, Powell has recently found himself in the government’s crosshairs. In July was New York Times reported that the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) was investigating Kraken for allegedly allowing customers in Iran to trade on the exchange to avoid U.S. economic sanctions.
In 2021, the US Commodity Futures Trading Commission (CFTC) fined Kraken $1.25 million for offering illegal digital currency products without a license. That same year, Britain’s TSB Bank publicly called out Kraken for not doing enough to protect consumers from fraud, prompting angry denials from Kraken management, who apparently did not see Powell’s tweets about how he personally engaged in money laundering tactics when US financial institutions temporarily froze Kraken’s accounts.
Buzzard of a feather
Powell’s resignation announcement drew Twitter praise from many of his peers, including the Binance CEO Changpeng ‘CZ’ ZhaoCoinbase CEO Brian Armstrong and Shapeshift’s Erik Voorhees. Binance and Shapeshift were among the exchanges that collaborated in the delisting of Bitcoin SV (BSV) in 2019 after Dr. Craig Wright decided he had taken enough defamatory insults from BTC maximalist Magnus ‘Hodlonaut’ Granath.
Powell’s decision to follow Binance’s lead in removing BSV from the exchange reportedly came after a Twitter investigation, but the exchange had unfairly labeled BSV as “an extremely risky investment” when it originally listed the token. Powell’s hypocrisy was on full display in June when Kraken decided to list the new symbol that emerged after the spring collapse of Terra. After rising to $10, the new token quickly lost 75% of its value. But you know, everyone has a different definition of “risky”.
Kraken, Binance and Shapeshift were among the exchanges named in a £9.9bn class action filed in the UK last month seeking justice on behalf of the estimated 240,000 BSV investors who suffered financial losses due to the collective delisting.
Kraken and Coinbase are also the subject of another lawsuit filed in May in the English High Court that accuses the exchanges of “passing off” the BTC token as Bitcoin despite BTC’s code undergoing changes that eliminate any resemblance to the Bitcoin described in Satoshi Nakamoto’s 2008 white paper.
Powell is Kraken’s largest single shareholder, so any financial judgment against the exchange will undoubtedly hurt his wallet. But it could prove a critical deterrent for potential investors to decide whether Kraken — with or without Powell at the helm — is worth the risk.
Follow CoinGeek’s Crypto Crime Cartel series, which delves into the flow of groups from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX and Tether – which have co-opted the digital asset revolution and turned the industry into a minefield for naive (and even seasoned) players in the market.
New to Bitcoin? Check out CoinGeeks Bitcoin for beginners section, the ultimate resource guide for learning more about Bitcoin – as originally envisioned by Satoshi Nakamoto – and blockchain.
