Crypto market maker GSR scales back, CFO and other top executives depart

Crypto’s oldest market maker GSR is retreating amidst the bear market. 

Amid this retrenchment, multiple executives, including c-suite level and department heads, have headed for the exit, according to five sources. Those sources also revealed how the retrenchment is impacting one of the industry’s best known players — one that is especially prominent in the U.S. market.

The firm’s Chief Financial Officer Jonathan Hugh is the most recent and perhaps the highest profile departure, the sources said. He joined the market maker in 2021 to help build out the company’s finance function, according to LinkedIn. Hugh did not respond to a request for comment from The Block. 

GSR’s Global Head of Product Benoit Bosc and Director of Trading Operations Aman Bhalla are also leaving the market maker, the sources said. Bosc had taken over the sales role from Michael Bressler, a seasoned TradFi executive from JP Morgan and Goldman Sachs who joined GSR to become its head of sales in 2021 and who left late last year, said one of the sources.

Other departures include Jake Dwyer, who joined the firm in 2021 leading GSR’s DeFi and venture initiatives. Romain Bernard, head of quant trading and trader Quentin Dubois have also exited the company, according to the people familiar with the matter. Jeff Stern, a director of business development at GSR, also left, according to LinkedIn. All of these departures occurred in the spring of this year.

Bernard, Vince, Dubois, Bosc and Bhalla did not respond to a request for comment. Bressler and Stern declined to comment, while Dwyer confirmed his departure.

“GSR has been at the center of crypto markets for ten years — markets that are fast-moving and volatile,” said a GSR spokesperson. “We owe it to our clients to continue adapting and evolving to keep pace with the speed of crypto, and we will continue to do so.” 

“Our business operations and strategy have naturally evolved to respond to changing market conditions, but there has been no restructuring,” said the spokesperson who confirmed the executive departures. Bosc and Bhalla will stay through the end of August to support a smooth transition of their roles, they added.

The Block spoke to five former GSR employees — on condition of anonymity — about the departures and its impact on the company.

Streamlining the business 

Founded in 2013, GSR has built a name for itself as one of the most established market makers in the crypto industry. In the most recent bull market, when bitcoin was hitting the lofty heights of $67,000, GSR rapidly expanded.

In July 2021, the firm’s co-founder Rich Rosenblum told The Scoop Podcast that the firm was on track to expand its headcount to more than 200 people from just 25 the year before. This rose above 300 at its peak, said one of the sources, before the headcount was reduced in a round of layoffs toward the end of last year. During this time of expansion GSR also bolstered its c-suite.

“The executive team is mostly friends and I think it threw off a lot of the momentum GSR built in the previous cycle,” said a source familiar with the firm’s operations. “They hired a lot of corporate Wall Street executives that came in at the top of the bull market, which ended up costing the firm dearly.”

Most of the c-suite have links to either Winton, which was the CEO Jakob Palmstierna’s former employer, or Goldman Sachs, which was co-founders’ Cristian Gil and Rich Rosenblum’s former employer. Individuals with links to one of the two companies include the current chief operating officer, chief technology officer, chief risk officer and as well as GSR’s former head of sales Michael Bressler, former head of product Benoit Bosc and former director of trading operations Aman Bhalla, according to LinkedIn data.

“Some of the leadership is out of touch with true crypto,” said another source who is also familiar with the firm’s operations. It was described by another source as operating an “old school Goldman Sachs culture.”

“In our line of work, having a diversity of thought and experience is critical,” said a GSR spokesperson. “Our crypto-native background helps us stay nimble, spot opportunities, and adapt quickly to the always-changing crypto markets. At the same time, our background in traditional finance gives us the ability to take a long-term view on things like risk management, portfolio strategy and business operation decisions.”

A spokesperson did not comment on whether there were replacements in the works for recent departures and both GSR’s LinkedIn and careers page do not show any open roles. Since late last year, GSR has also been streamlining its operations and focusing more on its core business of market making, said a third source familiar with the firm's operations. 

The firm had already implemented two rounds of layoffs and after spending time trying to expand market making beyond centralized exchanges — by introducing decentralized finance services — the company has had several members of the DeFi team leave the firm in recent months, they added.

A consensus view, from staff internally and at other trading firms, is that GSR got too big too soon and that its right size sits somewhere between 100 to 140 people, two of the sources said. The headcount is currently around 250, said one of those sources.

“While last year’s bear market created challenges for all crypto companies, our long-term belief in the space hasn’t changed,” said a GSR spokesperson. “We have continued investing and hiring in high-conviction areas and have maintained a world-class team of TradFi and DeFi talent that is uniquely positioned for another decade of growth.”

Scaling back in the U.S.

The firm’s strategy shift has been particularly focused on the U.S. with three sources saying the firm has been scaling back in the country. Sources attribute the retreat to a combination of dwindling appetite for token listings in the bear market, the higher cost of talent in the U.S. compared to other hubs such as Singapore and the U.K., and increased regulatory concerns.

“At one point it was probably their largest office and they have been scaling it down meaningfully,” said one of the sources. “They have given up their New York office and have a smaller space in Jersey City.” A second source confirmed the office move.

GSR provides market making services predominantly on centralized exchanges, which have been the subject of regulatory actions from both the U.S. Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC). Several prominent tokens from blockchain networks such as Solana, Polygon and Cardano have been listed as securities in these cases. Fintech company Revolut recently stopped offering its crypto trading services in the country in light of the recent crackdown. 

“Like most crypto organizations, we are closely monitoring the regulatory and legislative environments in the U.S. and abroad to ensure that we adhere to policies and guidance in all of the jurisdictions we operate in,” said a GSR spokesperson. The spokesperson did not provide a comment on the New York office closure.

Lately, GSR and other market makers have become increasingly risk averse — choosing to trade on fewer venues around the world in the last six to nine months, said one of the sources. 

“Jump, Wintermute and GSR have all made conscious efforts not to trade on U.S. venues and are trading on a lot less venues than they have in the past,” the source added. Trading on fewer centralized U.S. venues such as Kraken and Coinbase, has played a role in the firm’s desire to scale back in the country, they said.

A GSR spokesperson said, “We remain committed to the U.S. and continue to be actively involved in its crypto ecosystem, adapting where needed to comply with ongoing policy changes and developments. We are encouraged by recent legislative and regulatory progress and look forward to more clarity in the future.” Wintermute and Jump Crypto declined to comment.

While GSR is more cautious about trading on U.S. exchanges, one source said they are unlikely to be concerned about being the direct target of regulatory action from the agencies themselves as they have a thorough process for vetting projects’ tokens.

“I will say GSR does spend a large amount of money on compliance and legal,” they said. “They go above and beyond there. Their legal team is strong and sharp.” None of the sources were aware of any internal concerns about specific actions directly from regulators.

“GSR is part of an increasingly small group of organizations that have been able to continue operating at scale in crypto with this kind of longevity,” said a GSR spokesperson. “The key to that longevity has been and continues to be a commitment to high-quality talent, prudent risk management, and a willingness to adjust our strategies to reflect the opportunities and realities of the market.”

Introducing GSR Capital

Though market making has been GSR’s core focus, the company has also started to diversify its revenue lines by building out a new service called GSR Capital, which offers crypto investment products to institutional investors.

Spearheaded by the firm’s chief operating officer Andrew Moss, GSR Capital formally launched in 2022 with two product offerings, a bitcoin fund and a broader market fund. 

But it’s also a division that faces stiff competition from players in the traditional finance and the crypto market. Firms such as Bitwise, Galaxy Digital and Fidelity Digital Assets already offer similar services to institutional clients. And many players including titans such as BlackRock and Fidelity are racing to secure approval to launch spot bitcoin exchange-traded funds in the U.S.

Despite the hot competition, the division had managed to avoid the cuts compared to other areas of GSR. A GSR spokesperson said that the firm has recently integrated GSR Capital into its core business rather than have it exist as a separate division.

“When we launched GSR Capital in 2021, it was within an environment with limited options for pure crypto exposure and a lot of inbound client demand for those types of products,” said a GSR spokesperson. “Now, in 2023, with 20+ crypto ETF applications being considered by the SEC and the anticipation of one or many approvals in the coming year, we made the strategic decision to focus purely on high performance alpha and move away from long only beta powered funds.”

Update: This article has been updated to clarify the job titles for three of the former employees.

Disclaimer: Evgeny Gaevoy, the founder and CEO of Wintermute, sits on The Block's board of directors and is a shareholder.