According to people familiar with the matter, multiple executives of veteran cryptocurrency market maker GSR have resigned since the end of last year, including Chief Financial Officer Jonathan Hugh. In addition, GSR has been streamlining its operations and reducing the size of its U.S. presence.

Several managers resigned

Cryptocurrency market maker GSR has continued to downsize amid the bear market, with former CFO Jonathan Hugh and several department heads leaving the company since the end of last year, The Block reported, citing five people familiar with the matter.

People familiar with the matter said that Jonathan Hugh left recently, and according to his LinkedIn profile, he joined GSR in 2021 to help build the company's financial function. Additionally, GSR's global head of product Benoit Bosc and director of trading operations Aman Bhalla are also leaving the market maker.

Other departures include Jake Dwyer, who led GSR’s DeFi and venture capital initiatives, head of quantitative trading Romain Bernard, trader Quentin Dubois and director of business development Jeff Stern, all in the spring.

A GSR spokesperson said:

"For ten years, GSR has been at the center of the cryptocurrency market - a market that is rapidly changing and unstable. We have a responsibility to our customers to continue to adapt and evolve to keep up with the speed of cryptocurrency development, and we will continue to do so."

A spokesperson also confirmed the executive departures and said that its business operations and strategies "naturally evolve as market conditions change, but there is no restructuring."

Business streamlining

Founded in 2013, GSR is one of the best-known market makers in the industry, having expanded rapidly at the height of the bull market. In July 2021, GSR co-founder Rich Rosenblum said on "The Scoop Podcast" that the company's headcount was expected to increase from 25 the previous year to more than 200.

GSR, which had more than 300 employees before a round of layoffs late last year, also beefed up senior staffing during the expansion, a person familiar with the matter said. In addition, people familiar with the matter also stated:

"The executive team were mostly friends, and I think that disrupted the momentum that GSR had built in the last cycle. They hired a lot of Wall Street executives who came in at the top of the bull market, which ultimately cost the company dearly."

Most GSR executives have ties to hedge fund Winton or investment bank Goldman Sachs, and another person familiar with the matter said: "Some leadership is out of touch with real cryptocurrencies." Another person familiar with the matter described the company's operations. Described as an "old Goldman Sachs culture."

A GSR spokesperson said:

“Diversity of ideas and experience is critical in our work. Our crypto-native background helps us stay nimble, identify opportunities, and adapt quickly to the ever-changing cryptocurrency market. At the same time, our traditional finance background The background also gives us the ability to take a long-term perspective on issues such as risk management, portfolio strategy and business operation decisions.”

GSR has been streamlining its operations since late last year to focus more on its core business of being a market maker, people familiar with the matter said. Two sources said there was a feeling within the company and at other trading firms that GSR was expanding too quickly and too big, and that the right size would be between 100 and 140 employees. The company currently has about 250 employees.

Reduce the scale of operations in the United States

GSR’s strategic change is particularly focused on the United States. Three people familiar with the matter said that the company has been reducing the scale of its operations in the United States. They believe that the reasons include: reduced demand for token listings in the bear market, and the cost of talent in the United States relative to other countries. higher, and growing regulatory concerns.

GSR primarily provides market-making services on centralized exchanges, which have been the target of regulatory actions by the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Cryptocurrency market makers including GSR have become more risk-averse recently - choosing to trade on fewer exchanges around the world over the past six to nine months, a person familiar with the matter said, as have Jump and Wintermute .

While GSR is wary of trading on U.S. exchanges, one source said they are unlikely to worry about being a direct target of regulatory action because they have a comprehensive review process for the project tokens and GSR “does trade on U.S. exchanges.” A lot of money is spent on regulations and laws.”

GSR Capital

While market making has always been GSR’s core focus, the company has also begun diversifying its revenue streams by establishing a new service called “GSR Capital” to offer cryptocurrency investment products to institutional investors. Led by GSR Chief Operating Officer Andrew Moss, GSR Capital officially launched a Bitcoin fund and a broader market fund in 2022.

However, the sector also faces stiff competition from traditional financial and cryptocurrency market players. Still, GSR Capital has managed to avoid layoffs compared to other areas of GSR. A GSR spokesman said the company had recently integrated GSR Capital into its core business rather than as a separate unit.

“When we launched GSR Capital in 2021, there was significant customer demand for such products in an environment where options for pure cryptocurrency exposure were limited,” a GSR spokesperson said. “In 2023, now the SEC With more than 20 cryptocurrency ETF applications under review and one or more expected to be approved in the coming year, we have made a strategic decision to focus purely on high-performing Alpha strategies and move away from long-only Beta drives fund."

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