Former chief U.S. commodities regulator Christopher Giancarlo has resigned from BlockFi’s board of directors after only four months, CoinDesk has learned.
It was not immediately clear why Giancarlo is leaving the cryptocurrency lender’s board. He did not respond to multiple requests for comment.
Shortly after being contacted by CoinDesk for this story, BlockFi issued a press release saying Giancarlo has been replaced by Ellen-Blair Chube. BlockFi said Giancarlo “will continue to provide strategic counsel to the firm in an advisory role.”
“Crypto Dad,” as the Digital Dollar Project co-founder was known during his tenure as chairman of the U.S. Commodity Futures Trading Commission (CFTC), was the BlockFi board’s first independent director.
His unexpected exit comes at a critical juncture for BlockFi.
It is simultaneously fighting a legal onslaught, recalibrating from a messy $500 million funding round and strategizing for a stock market debut that BlockFi’s Series E investors were told could come as soon as 2022.
The legal issues plaguing BlockFi’s interest-bearing crypto accounts are likely the company’s most pressing challenge. Multiple U.S. states alleged in July that the company’s flagship BlockFi Interest Accounts (BIA) were unregistered securities, including regulators in BlockFi’s home state of New Jersey.
Torrents of bad press sent BlockFi into crisis mode just as it was finalizing a blockbuster funding round at a nearly $5 billion valuation. Lead investor Third Point LLC soon pulled out, according to venture capital reporter Eric Newcomer.
One month later and the independent director is jumping ship, too.
“If someone independent is leaving the board, that’s a huge signal,” said Matthew Semadeni, a professor at Arizona State University who studies corporate governance.
Giancarlo’s stature as a former regulator was a likely plus for BlockFi, Semadeni said, explaining that companies sometimes choose independent directors who “lend legitimacy to the board.”
Giancarlo’s April arrival certainly brought gravitas into the boardroom: With no BlockFi equity, he became the only independent voice among company insiders and investors. BlockFi described Giancarlo’s addition at the time as part of a board expansion to ensure a “public-market ready governance structure.”
With Giancarlo out, BlockFi is betting that Chube, a managing director at William Blair, is more eager to stick around.
“It’s like somebody putting an offer on a home,” Semadeni said of Giancarlo’s brief tenure, “doing the inspection, taking a look at the inspection and saying, ‘Yeah, I’ll pass on the house.’”
UPDATE (Sept. 1, 15:21 UTC): Adds information from a BlockFi announcement issued as this story was being published.
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