Why Celsius, Kraken and FTX are losing leaders

The great cold

Call it The Great Resignation, crypto edition. Top executives from some of crypto’s most prominent names – Kraken, FTX and Celsius – recently stepped down as crypto continued to roll after a very tough year. But these are not rank-and-file workers worried about wage stagnation or inadequate benefits. These are high-paid, high-profile executives in an industry that until recently was hailed as having world-changing potential.

If there’s a common thread, it’s this: Crypto winter is wreaking havoc on a once high-flying industry. And for some of the industry’s prominent figures, the cold is simply too much to bear.

The reasons for leaving? It’s complicated. As the crypto market crash triggered mass layoffs and sent some companies into bankruptcy, some executives took on new roles or headed straight for the exits.

• Alex Mashinsky, co-founder and CEO of Celsius Network, which filed for bankruptcy in July, resigned last week. He told the cryptolender’s board that his “continuing role as CEO has become an increasing distraction,” and that he was “very saddened by the difficult financial circumstances facing members of our community.” This week his co-founder, S. Daniel Leon, followed him out the door.
• Brett Harrison said he was stepping down as president of FTX US, saying the crypto industry is “at a number of crossroads,” including “the arrival of major market participants.”
• Kraken co-founder Jesse Powell, who recently caused a stir when he called on employees unhappy with the crypto giant’s culture to leave, also announced he was stepping down as CEO to become chairman. “I like to think of it as stepping up to the chairman role, getting a nice promotion,” he told Protocol in an interview.

“There are a lot of things I don’t like to do as CEO,” Powell told Protocol. That sentiment may be more and more common among his peers, especially in an industry that has gone from hot to cold in record time.

• “I think we may just be seeing leadership fatigue,” Michele Alt, co-founder and partner at Klaros Group, told Protocol, citing the headaches that crypto leaders have to deal with: “Financial pressures are high, employee morale is low, and regulators are watching closely .”
• Logan Allin, managing partner and founder of Fin Capital, agreed: “Executives are feeling the chill from company performance, failed business models and from the wrath of regulators.”
• Career calculations may also be at play here. Amid growing controversy over crypto and increased regulatory scrutiny, some executives “may be pulling the strings too late or ahead of what they perceive to be ‘terminal career risk,'” Allin told Protocol.

The decline probably does not mean the end of crypto. But after a crash that wiped out $2 trillion in value, increasingly intense pressure from regulators and the threat of another recession, “I suspect it’s a lot less pleasant to run these organizations than it used to be,” Alt said.

—Benjamin Pimentel (e-mail | twitter)

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On the money

The G20’s Financial Stability Board wants strict financial rules for crypto companies. POLITICO Pro reports that the FSB will propose a plan to rein in crypto when finance ministers and central bankers from the Group of 20 industrialized countries gather in Washington next week.

The holding company for Kabbage’s loan filed for bankruptcy. KServicing, the company that serviced small business loans that American Express left out of its 2020 Kabbage acquisition, is facing more scrutiny over how it handled Paycheck Protection Program loans.

Europe’s major crypto regulatory plan moved forward. An EU Council has agreed on the text for the long-awaited Markets in Crypto Assets regulation.

Stash adds crypto. The investment app with a reported 2 million users takes what it calls a “curated” approach, offering a selection of eight digital currencies: bitcoin, bitcoin cash, link, ether, lavanche, ETC, solana and UNI.

Moving a 401(k) is about to get easier. A rare collaboration between Fidelity Investments and Vanguard will automate the transfer of millions of 401(k) balances under $5,000 when workers change employers.

Do Kwon loses his passport. South Korea plans to invalidate the Terraform Labs founder’s passport as the country tries to rein in the crypto fugitive it seeks to detain.

Overheard

Some people take the whole “Crypto Dad” thing a little too seriously. “I have decided not to put a curfew on my teenager. I will only ground her if she comes home later than I want. Regulation by Enforcement,” Coinbase legal manager Paul Grewal tweeted.