The collapse in cryptocurrency prices, including Bitcoin, had a powerful and unexpected impact on the top crypto companies.
The damage caused by the cryptocurrency market crash is far from being measurable.
Digital currency prices have plummeted from their November highs, wiping out nearly $2.4 trillion, according to data company CoinGecko.
Bitcoin, the most popular cryptocurrency, has lost nearly three-quarters (73%) of its value since hitting a record $69,077.44 on Nov. 10. Similarly, Ether, the second largest cryptocurrency by market valuation, is down 74% from its peak of $4,878.26.
The list of victims of this catastrophe is long: many private investors have lost a large part or a large part of their savings. Prominent crypto firms around the world have filed for bankruptcy, while big names in the business world have booked hundreds of millions of dollars in writedowns.
Thousands of jobs in the industry have been axed or frozen. The crypto space that has been calling for clear regulation is now firmly on the authorities’ radar screens. They see the crypto crash as a signal that the fledgling industry is threatening the stability of the traditional financial system.
“Apparent scams, scams and theft in digital asset markets are on the rise: According to FBI statistics, reported monetary losses from digital asset fraud in 2021 were nearly 600% higher than the year before,” the Biden administration said in its recent premiere – increasingly comprehensive framework to regulate the crypto industry.
However, another group of victims of the crypto crash has received little attention: the CEOs and the founders, who are often one and the same in crypto.
A number of major crypto players were formed after 2009 when Bitcoin was created. They often come from similar backgrounds: they were in the technology industry and were among the first to jump on the cryptocurrency bandwagon.
Founding CEOs have resigned from their positions as managing directors since the summer.
The latest to let go of the operational reins is Jesse Powell, co-founder of cryptocurrency trading platform Kraken. Powell becomes chairman and is succeeded by an insider, Dave Ripley, who is currently the chief operating officer.
“We are grateful for Jesse’s leadership as well as his dedication to crypto assets and Kraken’s mission over the past 11 years,” Kraken said in a statement. “We are thrilled to have Dave as our new CEO as we enter our second decade of growth and global adoption.”
The platform added that a new era is beginning in its young history:
“Over the past 11 years, Kraken has evolved from a bitcoin exchange to a diverse crypto platform. Our products include an extensive suite of trading tools and educational resources, industry-leading staking services, futures trading, and an OTC desk. Kraken is used in shortly launch his own [nonfungible-tokens] Marketplace.”
Sailer and others
Before Powell, billionaire Michael Saylor, one of Bitcoin’s most prominent evangelists, stepped down as CEO of software company MicroStrategy (MSTR) – Get the MicroStrategy Incorporated report Beginning of August.
Saylor, who co-founded the company in 1989, will become chairman and will specifically focus on Bitcoin, whose falling prices caused MicroStrategy to post a $2 billion impairment in the second quarter.
CEO moves continued with the departure of Michael Moro from crypto broker Genesis and the resignation of Sam Trabucco, co-CEO of Alameda Research.
The CEOs of crypto companies are also increasingly being criticized by retail investors. These include Alex Mashinsky, founding CEO of insolvent crypto lender Celsius Network, and Stephen Ehrlich, CEO of insolvent exchange platform Voyager Digital.
Celsius and Voyager filed for Chapter 11 bankruptcies over exposure to crypto hedge fund Three Arrows Capital, or 3AC, which was forced into liquidation after losing hundreds of millions of dollars in the crash of sister cryptocurrencies Luna and UST in May.
Ehrlich is named in a lawsuit filed in August by investors who lost money in Voyager Digital’s bankruptcy. These investors claim that he and billionaire Mark Cuban “[induced] invest them in the fraudulent Voyager platform.”
Mashinsky has come under particular criticism on crypto forums on social networks like Reddit.