Crypto CEOs are leaving their jobs. Here’s why

by Arthur · September 29, 2022

By Frances Yue

Hello, welcome back to Distributed Ledger, our weekly crypto newsletter that hits your inbox every Thursday. I’m Frances Yue, crypto reporter at MarketWatch. I’ll be walking you through the latest and greatest in the digital resource world this week.

Over the past few weeks, CEOs of several major crypto companies have left their positions. I caught up with RA Farrokhnia, a professor at Columbia Business School to discuss the reasons behind such moves.

Find me on Twitter at @FrancesYue_ to send feedback or tell us what you think we should cover. You can also reach me via email to share your personal crypto stories.

Crypto in a flash

Bitcoin is down about 5.6% over the past seven days, trading at around $19,159 on Thursday, according to CoinDesk data. Ether lost 18% during the seven-day stretch to around $1,306. Meme token Dogecoin was down 2.8% while another dog theme, Shiba Inu , was trading 8% lower than seven days ago.

Crypto metrics

Biggest Gainers   Price    %7-day return 
Quant             $135.02  33.5% 
Tokenize Xchange  $7.64    29.5% 
Maker             $725.6   22.1% 
XDC Network       $0.03    19.6% 
Uniswap           $6.38    18.9% 
                           Source: CoinGecko as of Sept. 29 
Biggest Decliners  Price  %7-day return 
Evmos              $1.58  -33.5% 
Lido DAO           $1.59  -12.4% 
DeFiChain          $0.73  -8.7% 
ApeCoin            $5.40  -7.1% 
Osmosis            $1.10  -7.0% 
                          Source: CoinGecko as of Sept. 29

Exodus of crypto bosses

The crypto sector has seen an exodus of CEOs from large companies, as the decline in valuations this year hooked the industry.

In early August, Michael Saylor dropped the CEO title of MicroStrategy and took on a new role as executive chairman. In the same month, Michael Moro left the CEO of crypto lender Genesis, after parent company Digital Currency Group filed a $1.2 billion claim against bankrupt digital hedge fund Three Arrows. Meanwhile, Sam Trabucco resigned as co-CEO of Alameda Research, crypto billionaire Sam Bankman-Fried’s hedge fund.

Earlier this month, Jesse Powell, co-founder of crypto exchange Kraken, stepped down as the company’s CEO.

On Tuesday, Alex Mashinsky, CEO of crypto lender Celsius, stepped down from his position amid the company’s bankruptcy proceedings. That same day, Brett Harrison, president of FTX US, said he is leaving the role.

The reasons behind the movements can vary, with each company in a different position during the market downturn. Bankman-Fried’s FTX and Alameda have aggressively acquired several distressed crypto companies and assets, while some others, such as Celsius, filed for bankruptcy.

Still, a shakeout of C-suites on such a scale reflected changes in the overall crypto industry.

First come the market conditions. For C-suite members who took the reins a year or two ago, when digital assets were on a bull run, they now face different challenges, as bitcoin has lost nearly 60% of its value so far this year.

“Obviously in the downturn, things get a little more difficult. You need a different kind of management mindset, to weather the storm and a number of crypto companies are going through the experience in a very different way,” noted Farrokhnia.

Meanwhile, the crypto industry, born in 2009, has become more developed, with increasing institutional adoption and also regulatory attention. “It requires a different level of professionalism and maturity in senior management,” Farrokhnia noted. Some early adopters of crypto, who hold strong libertarian values, may have found their views clashing with newcomers.

Furthermore, the complexity of the crypto space contributed to the difficulty of finding new leaders outside the industry. That explained why successors are in most cases insiders in the companies, Farrokhnia said.

Ethereum’s ‘vanity address’ hack

About $950,000 in crypto was stolen on September 25 in an attack using a vanity address generator called Profanity, according to blockchain security firm PeckShield.

A “vanity address” is a personal cryptocurrency address created by users. Since such addresses are human-made, rather than being a random string of letters and numbers created by a machine, they are more vulnerable to brute force attacks.

The hackers took a total of 732 ether on September 25 before moving the funds to US government-sanctioned crypto mixer Tornado Cash, according to a tweet from blockchain security company PeckShield.

The attack is similar to a recent $160 million attack on Wintermute, a major crypto market maker.

MarketWatch’s Anushree Dave wrote more about it here.

Crypto companies, funds

Shares of Coinbase Global Inc. ( COIN ) plunged 9% to $61.27 on Thursday, falling 2.7% over the past five trading sessions. Michael Saylor’s MicroStrategyInc.( MSTR ) shares fell 4.8% on Thursday to $209.90, while they are up 9% in the past five days.

Miner Riot Blockchain Inc. (RIOT) shares fell 4.3% to $7.03 on Thursday and were up 10.8% in the past five days. Shares of Marathon Digital Holdings Inc. (MARA) fell 2.5% to $10.68, while rising 1.2% in the past five days. Another miner, Ebang International Holdings Inc. ( EBON ) saw shares up 0.8% to $0.40 on Thursday, while they were down 0.4% over the past five days.

Overstock.com Inc. (OSTK) shares fell 2% to $24.54. Shares traded 2.9% higher during the five-up period.

Shares of Block Inc. ( SQ ), formerly known as Square, fell 5.5% to $55.85 and were down 0.2% for the week. Tesla Inc. ( TSLA ) shares fell 6.7% to $268.59, down 6.9% in the last five days.

PayPal Holdings Inc. (PYPL) eased 2.8% to $88.55, with a gain of 0.9% in five sessions. Nvidia Corp. ( NVDA ) shares fell 4.5% to $121.65, on top of a 3.1% loss in the past week.

Advanced Micro Devices Inc. ( AMD ) shares fell 6.5% to $63.77 on Thursday, down 8% from five trading days ago.

Among crypto funds, the ProShares Bitcoin Strategy ETF(BITO) lost 0.5% to $11.99 on Thursday, while the Short Bitcoin Strategy ETF(BITI) gained 0.8% to $38.34. The Valkyrie Bitcoin Strategy ETF(BTF) traded 1.1% lower at $7.44, while the VanEck Bitcoin Strategy ETF(XBTF) cut 1.4% to $18.82.

Grayscale Bitcoin Trust(GBTC) retreated 2.3% to $11.42.

– Frances Yue

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(END) Dow Jones Newswires

09-29-22 1605 ET