Abra is reshuffling several of its business lines as the company with aspirations to become the US’ first regulated crypto bank has taken a hard look at cost-cutting as a buffer against the bear market, according to three sources familiar with the matter.
The measures undertaken by Abra’s top executives include a relatively measured number of personnel cuts across the firm’s sales, trading and research divisions, sources said. Still, they’re significant in the sense that they include senior personnel departures.
Michael Maizels, Abra’s head of research, was among those laid off within the last couple of months, as was Robin Malik, a head of over the counter (OTC) trading at the firm. There’s no indication any of the terminations were related to performances, sources said. The moves appear to be related to difficult crypto market conditions and the need to cut costs accordingly.
Maizels and Malik both declined to comment. Sources were granted anonymity to discuss sensitive business dealings.
“[The layoffs were] more of a cost-efficiency cutoff, where people weren’t getting business, for whom there was no work to be done — not performance-related at all,” a source said.
Generally, sales professionals are among the first to go when a crypto company makes the call to conduct layoffs in a bear market. That’s typically because current and potential customers tend to dial down their digital asset activities in down markets, so sales people have far fewer calls to make.
Abra wanted a chief investment officer
CEO Bill Barhydt and Abra’s senior executives in December installed Robert Wallden as the firm’s head of institutional asset management. Though Wallden has a solid resume — including stints at BNP Paribas, Deutsche Bank and Gelber Group — he also has a background in sales, two sources said.
The New York-based Wallden, who most recently held the title of director of credit and trading platforms origination for Abra, appears to have some trading experience, per his LinkedIn. But both sources dubbed his selection as a curious pick, given his prior sales experience. Wallden did not reply to a request for comment.
Abra made a first-time push into institutional asset management early in 2022, building off what had been one-off trading strategies for individual clients. The general idea at the time was to port opportunities to deliver crypto yield that had been developed on the credit side of the business to the emerging trading and money-running side.
The more recent moves, one source said, may stem from Abra’s plan to put in place what would have been a newly created position: chief investment officer. That role, for which interviews have been conducted, would have created a new structure designed to connect Abra’s trading, credit and asset management divisions. The heads of each would report to the chief investment officer, who would be tasked with corresponding oversight and determining how capital is allocated to each unit.
Such a setup would have simplified and consolidated internal communication, the source said.
That effort appears to have stalled internally, possibly due to the expense of bringing on a chief investment officer in the current market, the source added.
Barhydt declined to comment on individual employees. He did not return an additional request for comment regarding a prospective chief investment officer.
Regardless, such a hire would represent a change in how Abra has historically structured its hierarchy, according to two sources.
“There is definitely some restructuring going on,” one of the sources said.
Barhydt said his firm has expanded trading operations over the course of the fourth quarter to include over the counter (OTC) crypto capabilities, structured products and derivatives.
“Our trading business is doing great,” Barhydt said in a text message.
Abra “did layoffs earlier in the year as a purely cutting measure,” Barhydt said. Sources said the sales staffers were laid off at some point earlier in 2022, with the other cuts occurring recently.
Barhydt’s big crypto bank ambitions
The push for a chief investment officer, if there is still one in the works, started gaining steam around the same time Barhydt announced Abra’s ambitions to become a bank in September, one source said. The plan is to create two entities: Abra Bank in the US and Abra International, designed to serve non-US customers.
Abra at the time dubbed the US component of the effort as what “will be the first regulated bank in the US that will enable our customers in the US to deposit and bank with digital assets, and access global fiat on and off ramps.”
“A lot of it had to do with the way the economy is right now and how difficult it is to raise new money and get new capital into the company,” the source said. “Priorities have been realigned.”
Abra is known among industry participants as a credit specialist with a roster of institutional clients. Barhydt told Blockworks the company has “won many institutional deals in the current quarter,” adding that the trading division has “grown significantly this quarter.”
And the company doesn’t seem to have been stung especially hard by the demise of Sam Bankman-Fried’s Alameda Research and FTX. In a Nov. 10 statement, Barhydt said Abra’s
“retail, lending and private crypto wealth management businesses don’t have any exposure to Alameda and have no material exposure to FTX or the FTT token.”
“Abra did use FTX for some trading activities,” Barhydt said at the time. “We moved most assets off of FTX and hedged our exposure on those that remain.”
The chief executive attributed the firm’s ability to “manage risk so effectively” to stringent risk management practices when it comes to lending.
“Every lender suffers losses,” Barhydt said then. “The key is to practice sound risk management to minimize the impact of losses while maintaining a reasonable level of profitability.”
Still, three sources said it’s clear there has been a top-down push to reevaluate how Abra approaches trading.
“All of this has sort of cascaded,” one of the sources said. “When you line up the chess pieces, it all makes sense that the whole point was to overhaul trading. Would this have happened if the industry hadn’t reeled?…That I don’t know.”
All three sources referred to Abra undertaking a “restructuring.”
“Abra hasn’t restructured anything,” Barhydt said.