Crypto shakeout engulfs top management as CEOs start stepping down

NEW YORK – The cryptocurrency industry’s epic shakeout, having cost thousands of jobs and set off a round of consolidation, is reaching the corner office. 

Crypto exchange Kraken announced on Wednesday that co-founder Jesse Powell will step down as CEO, to be replaced by chief operating officer David Ripley. The reshuffle comes shortly after Genesis’s Michael Moro and Bitcoin evangelist Michael Saylor, along with Sam Trabucco of Alameda Research, relinquished top positions. 

The raft of successions sets the stage for a changing of the guard in the roughly decade-old industry.

Many of crypto’s most prominent leaders, like Mr Powell, are technologists who discovered digital assets early, cultivated devout Twitter followings and didn’t hesitate to engage their detractors in online battles. With the sector reeling from a slump that’s shaved off roughly US$2 trillion (S$2.8 billion) from cryptocurrencies’ market value and landed some bosses in bankruptcy court, regulators’ cross-hairs or worse, boards are starting to look for different skills. 

“If there is a firm in complete crisis and meltdown, you need an adult in the room, and you need that adult in the room to understand regulation and compliance,” said Deepali Vyas, who leads executive search for areas including crypto at Korn Ferry. 
Vyas is currently looking for CEOs for a crypto exchange and a crypto miner which she declined to identify, and she expects more C-suite changes throughout the industry in the fall. 

Insiders take over

This wave of changes started in earnest in early August with Mr Saylor, who founded MicroStrategy in 1989, giving up his CEO title to focus more on Bitcoin – even after his buying of the token led to a US$918 million second-quarter impairment charge. Two weeks later, Mr Moro stepped down as CEO of Genesis, the crypto brokerage stung by exposure to defunct hedge fund Three Arrows Capital. 

On Aug 24, Alameda co-CEO Trabucco announced that he’s stepping down to “prioritise other things.” Like at Kraken, insiders are taking over at MicroStrategy and Alameda, while Genesis appointed chief operating officer Derar Islim as interim CEO while it searches for a permanent replacement.

Mr Powell, 42, said his decision to step down was more than a year in the making, and driven in part by a desire to deal with “personal stuff.” He plans to devote “maybe 40 hours a week instead of 80 hours” to Kraken, he said in an interview, adding that he’ll focus more on products and advocacy and less on management. 

Founder-influencers

In June, the New York Times published an article that said Mr Powell had “ignited a culture war” among Kraken’s employees through comments some saw as “hurtful.” On June 15, the day the Times’s story ran, Mr Powell published a Twitter thread that said, among other things, that about 20 Kraken workers were “totally not on board” with its corporate culture. 

Replacing founders carries its own set of risks. 

“They tend to have this incredible ability to influence the community or engage developers. That is very important in crypto,” said Stefan Cohen, a partner at Bain Capital Crypto, an investment fund focused on early-stage protocol projects and investor in BlockFi and MakerDAO. “It’s very hard to move these people out and I don’t think you’d really want to.”

Most crypto board members and investors are used to the volatile nature of the asset class and so tend to be less inclined to blame management in a “down cycle,” Mr Cohen said.