WASHINGTON, DC - OCTOBER 03: Securities and Exchange Commission (SEC) Chair Gary Gensler listens during a meeting with the Treasury Department's Financial Stability Oversight Council at the U.S. Treasury Department on October 03, 2022 in Washington, DC. The council held the meeting to discuss a range of topics including climate-related financial risk and the recent Treasury report on the adoption of cloud services in the financial sector. (Photo by Anna Moneymaker/Getty Images)
Photo: Anna Moneymaker/Getty Images

Who’s to blame for the crypto crash?

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Good morning! Some members of the crypto industry are blaming Gary Gensler for the FTX crash. But has the SEC chair actually been vindicated? Let’s dig in!

The blame game

FTX’s controversial founder, Sam Bankman-Fried, has been tagged as the main culprit for the latest crypto meltdown. But crypto industry leaders are also pointing a finger at another surprising target: Gary Gensler, Protocol’s Ben Pimentel reports.

The argument: that the SEC, under Gensler, has done such a terrible job in providing regulatory clarity to crypto companies in the U.S. that it forces companies to set up shop in other countries — in FTX’s case, the Bahamas — known for loose regulations. And that, in turn, encouraged SBF to do really bad things.

  • One wild and sinister conspiracy theory being bandied about on crypto Twitter suggests that Gensler had secret dealings with now-disgraced Bankman-Fried. Ripple general counsel Stuart Alderoty also asked on Twitter whether the SEC chair was “acting alone when meeting with SBF? Would SBF have ended up with even more consumer assets under his control?”
  • No evidence has been presented to back up these allegations. The SEC did not immediately respond to requests for comment.

But the attacks on Gensler have been met with pushback from other industry observers who argue that the FTX crash actually proves that Gensler’s approach to crypto was correct. By embracing what the crypto industry denounced as unreasonable and rigid policies, Gensler in fact minimized the harm the FTX meltdown had on U.S. consumers.

  • John Reed Stark, a staunch crypto critic and founding chief of the SEC’s Office of Internet Enforcement, said Gensler “saved millions, perhaps even billions, in investor crypto-losses” by taking on the industry “despite mammoth political opposition and rogue defendants with infinite financial resources.”
  • Marc Fagel, former SEC regional director for San Francisco, downplayed speculation that the SEC colluded with FTX simply because Gensler’s staff had meetings with the company. “Plenty of players in the crypto industry have met with various members of the SEC,” Fagel told Ben.

Circle CEO Jeremy Allaire said the U.S. Congress’ failure to pass new laws for crypto led to the tough situation that U.S. crypto companies face in the wake of the FTX crash. But he also assigned some blame to the SEC under Gensler, who has stressed that crypto companies must be more transparent through disclosures.

“We can't just say we have the rules, follow them,” he said. “What is it? That's what a lot of people have been asking for. There has to be tailored rules.”

Read more: Is the FTX crash Gensler’s fault — or did it prove he’s right?

Is it the end of job perks as we know ’em?

Silicon Valley is reeling. In just over a week, over 17,000 workers have been laid off from Twitter, Meta, Salesforce, Coinbase, Stripe, and Lyft, with thousands more layoffs expected to come soon from Amazon, Protocol’s Allison Levitsky writes.

  • For years, Big Tech has been paying high salaries and supplying generous perks to pick up as much talent as it could while retaining even workers who were underperforming.
  • Now, companies are buckling under that rapid growth, making deep cuts and turning up the heat on performance. In preparation for as many as 2,500 layoffs, Salesforce’s HR team scrambled last week to update its policies around termination, giving managers more power to put employees on performance improvement plans and fire them with little HR oversight.

Is this the end of the cushy tech job? Maybe. The tight labor market put more power in the hands of workers, which — at least in Big Tech — has led to a shift away from hustle culture and toward work-life balance, self-care, and, some would argue, “quiet quitting.” Now it seems like a return to hustle culture is bubbling up from this month’s bloodbath of layoffs.

  • A photo of Esther Crawford — a director of product management at Twitter — sleeping on the floor of the office went viral on Twitter last week as Musk prepared to lay off half the company. Her report, product manager Evan Jones, captioned it, “When you need something from your boss at Elon Twitter.”
  • The photo sparked a debate around hustle culture, with some replies labeling office all-nighters as would-be “labor violations” and fodder for “trauma bonding,” while others commended Crawford for her dedication.

Big Tech culture may get more intense, but this won’t last long, according to Nolan Church, co-founder and CEO of Continuum, a people-leader talent marketplace, and Flo Crivello, an entrepreneur who spent four and a half years at Uber before founding the remote office startup Teamflow.

  • “I actually think [the power is] still going to be on the employee's side for the foreseeable future,” Church said. “But I do think it has swung back slightly, in the sense that now, CEOs can be a little bit more realistic with how businesses are run — they need to drive profits, and money is no longer free, and sometimes we need to work on weekends.”
  • Crivello predicted that engineers’ lives would become 20% more intense for a year or so before going back to normal. It’s “just economics,” he said.
  • “Historically, there has been infinite demand for engineers and very little supply,” Crivello said. “These companies have very little leverage.”

Read more: Is this the end of the cushy Big Tech job?

A MESSAGE FROM THE FINANCIAL TECHNOLOGY ASSOCIATION

Don’t miss out! Register today to hear some of the biggest players in fintech discuss the industry’s most pressing issues at the Financial Technology Association’s inaugural Fintech Summit: Shaping the Future of Finance. Produced in partnership with Protocol, all sessions of the event will be live-streamed on November 16th.

Learn more and reserve your spot here.

People are talking

Former SoftBank investor Marcelo Claure said the FTX fallout is an example of how not to invest:

  • “We should NEVER invest because of FOMO and we should always 100% understand what we are investing in. I totally failed here on both.”
Jeff Bezos says he plans to give away most of his fortune, but figuring out how to maximize the impact the money has isn't easy:
  • “The hard part is figuring out how to do it in a levered way."

Par-Jorgen Parson, a partner at VC firm Northzone, thinks many highly valued unicorns are in for a rough ride:

  • “We will see spectacular failures."

Elon Musk publicly fired Twitter engineer Eric Frohnhoefer yesterday, and then Frohnhoefer summed up the atmosphere at the company:

  • “Employees don’t trust the new management. Management doesn't trust the employees."

Making moves

Amazon is planning to lay off around 10,000 employees as soon as this week. The cuts could largely affect new hires, including those who have not yet started but who have signed an employment contract.

Tencent has begun a round of layoffs, according to Reuters, that will hit its video streaming, gaming and cloud units. The scale of the layoffs was not reported.

Mighty, a web browser, is shutting down. Founder Suhail Doshi said the team will refocus efforts on “making new kinds of creative tools using advances in AI.

Berkshire Hathaway has taken a $4.1 billion stake in TSMC it disclosed on Monday.

In other news

Google agreed to pay $391.5 million to 40 states to resolve a probe of the company’s location-tracking practices.

Twitter implemented a stricter freeze on software code, meaning new features can’t be shipped unless they’re critical. Also: Twitter employees will continue to be awarded stock even though the company is now private, CNBC reports.

Epic Games is appealing the antitrust ruling from its case against Apple. The ruling sided with Apple after the Fortnite maker sued it for its App Store rules, which charge developers up to 30% on in-app purchases.

FTX’s bankruptcy might involve one million creditors, according to court filings.

Italy placed a moratorium on the use of facial recognition and “smart glasses” until the end of next year, except for in law enforcement contexts.

BlockFi said that it had “significant exposure” to FTX and associate entities. Withdrawals on the platform are still paused, and the crypto lender has asked clients not to make deposits.

Amazon launched a virtual healthcare clinic in the U.S. which will provide treatment for common conditions such as allergies, acne and asthma.

Laid off from Big Tech and looking at doing an MBA? Northwestern University’s Kellogg School of Management will waive its testing requirements for you.

Sorry, Gen Z can’t pick up the phone right now

Political polling is stuck in the past, which makes it very hard to predict how people will vote. Pollsters still largely rely on constituents picking up the phone or clicking through links sent via text to get data on their voting plans. And amid the uptick in robocalls and spam texts in the past year, young people are much more keen on hitting “ignore” or deleting a text than other generations if they don’t recognize a phone number. So it's probably time for pollsters to rethink their approach.

A MESSAGE FROM THE FINANCIAL TECHNOLOGY ASSOCIATION

Don’t miss out! Register today to hear some of the biggest players in fintech discuss the industry’s most pressing issues at the Financial Technology Association’s inaugural Fintech Summit: Shaping the Future of Finance. Produced in partnership with Protocol, all sessions of the event will be live-streamed on November 16th.

Learn more and reserve your spot here.

Thoughts, questions, tips? Send them to sourcecode@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.

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