The damage caused by the crash of the cryptocurrency market won’t be measurable for a long while.
Digital-currency prices have crashed from their November highs, wiping out nearly $2.4 trillion, according to data firm 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 cryptocurrency by market valuation, is down 74% from its high of $4,878.26.
The list of casualties from this disaster is long: Many retail investors have lost much or most of their savings. Prominent crypto firms worldwide have filed for bankruptcy, while big names in the business community have booked hundreds of millions of dollars in impairment charges.
Wave of Departures
Thousands of jobs in the sector have been eliminated or frozen. The crypto space, which has demanded clear regulation, is now clear on the radar screen of the authorities. They see the crypto crash as signaling that the young industry threatens the stability of the traditional financial system.
“Outright fraud, scams, and theft in digital asset markets are on the rise: according to FBI statistics, reported monetary losses from digital asset scams were nearly 600% higher in 2021 than the year before,” the Biden administration said in its recent first-ever comprehensive framework to regulate the crypto industry.
Another set of victims of the crypto crash, however, has gone little noticed: the CEOs and the founders, who in crypto are often one and the same.
A number of major crypto players were founded after 2009, when bitcoin was created. They often have similar backgrounds: They were in tech and were among the first to jump on the cryptocurrency bandwagon.
Since the summer, founding CEOs have given up their duties as chief executives.
The latest to let go of the operational reins is Jesse Powell, co-founder of the Kraken cryptocurrency trading platform. Powell will become chairman and will be succeeded by an insider, Dave Ripley, who is currently chief operating officer.
“We are grateful for Jesse’s leadership, as well as his dedication to crypto values and Kraken’s mission over the last 11 years,” Kraken said in a statement. “We are thrilled to have Dave as our new CEO as we embark on our second decade of growth and global adoption.”
The platform added that a new era in its young history was opening:
“Over the past 11 years, Kraken has evolved from a bitcoin exchange into 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 will soon launch its own [nonfungible-tokens] marketplace.”
Saylor and Others
Saylor, who co-founded the firm in 1989, becomes chairman and will focus more specifically on bitcoin, whose falling prices prompted MicroStrategy to record a $2 billion impairment charge in the second quarter.
The CEO moves continued with the departure of Michael Moro of crypto brokerage Genesis, and the resignation of Sam Trabucco, co-CEO of Alameda Research.
The CEOs of crypto firms are also increasingly criticized by small investors. These include Alex Mashinsky, founding CEO of the bankrupt crypto lender Celsius Network, as well as Stephen Ehrlich, CEO of the bankrupt exchange platform Voyager Digital.
Celsius and Voyager filed for Chapter 11 bankruptcy due to their 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 the bankruptcy of Voyager Digital. These investors allege that he and billionaire Mark Cuban “[induced] them to invest in the deceptive Voyager platform.”
Mashinsky has come in for particular criticism on crypto forums on social networks like Reddit.