Why are so many top crypto leaders resigning?

FTX.US President Brett Harrison and Celsius CEO Alex Mashinsky both resigned yesterday, following dissent from a list of other top crypto executives. They follow Genesis CEO Michael Moro, Microstrategy CEO Michael Saylor, Kraken CEO Jesse Powell, and Alameda Research co-CEO Sam Trabucco, who have all stepped down from their positions in recent months.

Crypto leaders bow out

A surprising number of senior crypto leaders have resigned from their positions this year.

FTX.US President Brett Harrison joined the growing list of notable departures on Tuesday, announcement on Twitter that he would be stepping down and moving into an advisory role with the company in the coming months. Harrison, who had been in the position for a year and a half, stated in his posts that the crypto industry was at a “number of crossroads” and that he would continue to work with crypto to remove barriers to entry for incoming “major market participants.”

Harrison’s announcement came just an hour after Celsius CEO Alex Mashinsky announced that he would also resign from the leadership position. However, Mashinsky’s motives were quite different, as he chose to remove himself because his “continuing role as CEO [had] become an increasing distraction.” Celsius, which used to be one of crypto’s top lending companies, filed for bankruptcy after facing insolvency problems this summer; customers have yet to be repaid.

Harrison and Mashinsky are stepping down under very different circumstances – the former after growing FTX.US from a three-person team to a hundred-strong company in seventeen months, and the latter after overseeing the creation of a $1.19 billion hole dollars in its operations. the company’s balance sheet. Still, their departures are illustrative of an ongoing shift within the crypto industry.

Crypto hangover

Crypto is still reeling from the abrupt end to the euphoria-driven bull market that ran amok in space from 2020 to 2021. With Bitcoin and Ethereum both down over 70% from their all-time highs, the total cryptocurrency market capitalization is currently under $1 trillion, down from $3 trillion in November 2021. Market volatility has wiped out many prominent industry figures, including wanted Terra co-founder Do Kwon and the notorious Three Arrows Capital duo Su Zhu and Kyle Davies.

Celsius was one of several firms that ran into trouble as a result of Terra’s $40 billion collapse and subsequent market downturn. In that sense, Mashinsky’s departure is a consequence of past behavior, like a bad hangover after a wild party. So was Michael Moros, who Resigned as CEO of Genesis in August when his firm was hit by a $2.4 billion loan to Three Arrows (Celsius also had exposure to the hedge fund).

Microstrategy co-founder Michael Saylor’s recent change in position from managing director to CEO can also be seen in this light. Saylor was Bitcoin’s most vocal advocate throughout the recent bull run; He probably still is today. But Microstrategy is now $1.5 billion underwater on its Bitcoin position, having invested in the top crypto at an average price of $30,639 per coin (Bitcoin is currently trading below $19,000). The decision to replace Saylor with a Microstrategy executive focused on the company’s original mandate of business intelligence and mobile software could mean the firm is regretting its past Bitcoin gluttony — or at least not wanting to indulge in it anymore.

A pivotal moment

While retail interest in crypto has waned this year, digital assets are attracting more political attention than ever before. The White House released its first comprehensive crypto regulatory framework on September 16, urging the Treasury Department, Justice Department and other agencies to continue monitoring the space. TThe Securities and Exchange Commission and the Commodity Futures Trading Commission have both started takes a much more “hands on” approach to regulation, and legislators are active debate cryptopolitics in Congress.

Recent developments show that crypto is emerging from regulatory uncertainty. While that may attract the “major market players” Harrison referred to in his departure announcement, it points to a shift in the crypto landscape. Jesse Powell’s resignation makes sense in this context. Powell, one of the most outspoken libertarians in the crypto space, founded Kraken in 2011 when crypto was still very niche.

Over the past year, Powell has criticized the Tornado Cash sanctions as well as the Trudeau government’s attempt to seize Canadian protesters’ crypto funds. He also refused to block crypto addresses belonging to Russian accounts unless required by law. Powell may reposition because he sees crypto becoming a more regulated, more compliant, less sovereign space. “For me, this is about spending more time on things I’m good at and enjoy doing, like working on product and industry advocacy,” he recently told Fortune.

What’s coming?

Time moves at a different pace in crypto. Since the space is evolving incredibly quickly, it can routinely feel overwhelming – even to veterans. So it was understandable when Alameda Research co-CEO Sam Trabucco announced he resigned last month because he wanted to travel, spend time with family and friends and enjoy his new boat. During the bull market, Trabucco became famous for posting threads detailing how and why Alameda would provoke liquidation cascades—after they happened. Now he is pivoted to posts pictures of the turquoise water and boat-related gifs.

Not all crypto leaders enjoy a similar happy ending, but the recent shuffling of industry leaders signals that something is up with the space. The market turmoil seems to have rid the industry of its most reckless numbers; it has also allowed some to reposition themselves for the next wave of adoption, which may be led by large financial institutions. Some of the recent terminations were due to past actions, while others seem forward-looking. Crypto is still a long way from achieving new all-time highs. But when that time comes, the space will be ready for it.

Disclaimer: At the time of writing, the author of this piece owned BTC, ETH and several other cryptocurrencies.