Some staff at Bitget’s new blockchain, Morph, initially considered the L2 community as a possible future rival to Coinbase’s Base.
However sources accustomed to the challenge inform Blockworks that Morph has been stymied by inner dysfunction. Sources declare that since a $20 million seed increase in March of final yr, workforce conflicts, flashy spending and a mysterious “shadow CEO” have led to layoffs, delays and a lack of path.
Blockworks spoke with a dozen present and former staff who had been granted anonymity to share candid particulars of what went mistaken inside one in every of Bitget’s most public bets.
Morph’s beginnings
Exchanges are crypto’s largest apps. A technique these digital asset titans capitalize on their reputation is by launching their very own blockchains.
Binance first launched the BNB Chain in 2020. Coinbase launched an Ethereum layer-2 named Base in 2023. Kraken, OKX, and Gate.io have all constructed or are constructing blockchains.
These chains will be profitable. Base generated $76 million in gross revenue in 2024, per Blockworks Analysis.
It was on this context that an L2 named Morph turned a sizzling ticket after being incubated by Bitget, the tenth largest change by spot quantity. However as a substitute of following a extra basic startup mannequin the place two co-founders come along with a single concept, Morph noticed two co-founders who didn’t know one another grow to be paired collectively.
The workforce behind Morph introduced in Azeem Khan — who lives within the US and was beforehand head of impression at Gitcoin — and Cecilia Hsueh, who is predicated in Singapore, in accordance with her LinkedIn. Hsueh was previously chief advertising and marketing officer and, briefly, the CEO of the crypto change Phemex. She was tapped as CEO of Morph, whereas Khan turned chief working officer.
Issues regarded brilliant at first. As crypto fundraising started to get better, Morph raised $20 million in seed funding from US-based enterprise agency Dragonfly. Different buyers included Pantera, MEXC Group, Bitget’s enterprise arm Foresight Ventures, and Spartan Group.
Bitget and Foresight didn’t return a number of requests for touch upon Morph. Dragonfly and Pantera declined to remark when reached.
Morph’s mainnet went reside in late October of final yr. In response to Morph’s block explorer, the L2 had roughly 16,000 transactions on Monday, Could 12. To place these numbers in perspective, Base averages a number of million each day transactions, per a Blockworks Analysis dashboard.
The launch was solely half the battle. The opposite large objective was to launch a token, former staff recounted, however this has but to materialize.
Final month, Morph teased that people who mint so-called Platinum NFTs could be “securing their place within the ecosystem at a $500 million FDV valuation, with 50% token unlock at TGE.”
The seed spherical had put Morph at a $125 million valuation in March 2024, in accordance with an individual acquainted.
For the reason that increase, nevertheless, Bitget’s layer-2 has skilled a turbulent yr.
‘Ghost founder’
As Morph staffed up and tried to carry a working blockchain to market, cracks emerged amongst its management.
Folks acquainted described pressure between Hsueh and Khan, who didn’t know one another earlier than being tapped as co-founders.
Khan declined to remark when reached by Blockworks.
Bitget, which isn’t out there within the US, has seen robust progress the previous few years in Africa, South Asia and Southeast Asia, in accordance with firm knowledge. Morph initially aimed to succeed in customers within the International South who aren’t being served by different change blockchains, as co-founder Azeem Khan defined in a CoinDesk interview final yr.
Strategically, Khan and Hsueh weren’t all the time aligned, per a number of sources. Whereas Khan talked about rising markets in press appearances, these initiatives had been sluggish to materialize internally, former staff recounted. A workforce that spent months planning out activations in these markets was instructed they wouldn’t obtain a finances, a supply stated.
Stranger nonetheless, staff who spoke to Blockworks sensed that neither Khan nor CEO Hsueh appeared to all the time have the ultimate say on issues.
One worker described Khan as being extra like a “ghost founder” than an precise co-founder, and famous they’d by no means seen something prefer it all through their crypto profession.
Quite a lot of decision-making energy appeared to relaxation with Forest Bai, a co-founder and companion of Foresight Ventures (Bitget’s enterprise arm and an investor in Morph) in addition to chair of The Block. A number of folks confirmed that Bai was like a “shadow CEO.” Sources famous that he had oversight on issues like spending and firm technique.
Khan introduced that he was leaving Morph in March, noting in an X submit that stepping down was “the very best path ahead for me.” He’s since emerged as a co-founder of a special blockchain named Miden.
The dearth of alignment and unbiased decision-making energy contributed to Khan’s departure, in accordance with a number of folks acquainted.
Hsueh has stayed on as CEO — though her energy internally has allegedly waned additional in current months, three folks instructed Blockworks.
Who’s actually in cost?
Practically everybody Blockworks spoke to described Hsueh as having a restricted understanding of the technical ins and outs of blockchain. Whereas it’s not a prerequisite for an government to be crypto-native, sources claimed that Hsueh was out of contact with blockchain customers and didn’t present an curiosity in studying concerning the know-how, creating a sense that Morph lacked clear strategic path.
As a substitute, Hsueh was preoccupied with rising her on-line presence, sources stated. Three ex-employees recounted being requested to interact together with her posts. Others added that Hsueh would prioritize bulletins about Morph on her private account over the official account.
At one level, Hsueh took to posting photos of her toes on X.
It’s unclear how a lot energy Hsueh nonetheless holds, although an ex-employee described her as being “teflon.”
Whereas she’s listed because the CEO in firm paperwork, Foresight Ventures co-founder Forest Bai’s identify seems subsequent to hers on an inner group chart shared with Blockworks.
An edited screenshot from Morph’s organizational chart exhibiting Bai and Hsueh’s roles
Neither Hsueh nor Bai returned emails or messages requesting feedback.
Whereas Bai has taken extra management in current months — having been formally added to the corporate Slack, per three sources acquainted — others famous that he held sway over each Khan and Hsueh earlier than Khan’s departure. Formally, Bai is listed as a marketing consultant in inner Slack messages seen by Blockworks.
One other inner Slack message shared with Blockworks requested Bai’s presence in ecosystem and advertising and marketing workforce conferences.
Deal or no deal?
In 2024, Morph was an enormous spender, 4 folks stated. Granted, the corporate had simply finalized a $20 million increase.
However the spending included occasions with Ok-pop band tripleS, the place Morph allegedly coated the group’s journey and lodging, one supply instructed Blockworks. An invitation on Lu.ma, a preferred web site utilized by tasks planning post-conference occasions, teased a “particular efficiency” by tripleS in April of final yr. The occasion was hosted by Zircuit, Bitget, Morph, Foresight Ventures and Quantstamp.
A number of sources mentioned Morph spending a whole bunch of 1000’s of {dollars} on occasions at crypto conferences. At Token2049 in Singapore, Morph hosted an all-day aspect occasion at Singapore’s ArtScience Museum, sources famous. A Lu.ma invite reveals that the occasion was attended by the likes of Vitalik Buterin, Avara’s Stani Kulechov and Aptos’ Mo Shaikh, with well-liked South Korean performer DJ SODA as the principle act on the afterparty.
The big occasion spending didn’t align with the return on funding or backside line, one other supply famous. And, whereas occasions appeared to get cash, Hsueh appeared reluctant to greenlight precise enterprise offers, folks acquainted instructed Blockworks.
The brilliant aspect of the corporate’s spending, per a supply acquainted, was that Morph initially compensated its staff competitively.
Outdoors of occasions, there have been discussions for a bodily workplace in New York Metropolis that culminated in an area on One World Commerce Heart’s 77th ground, three sources instructed Blockworks.
The workplace can be shared with Foresight and The Block, although it’s unclear who’s on the lease.
On the developer aspect, Morph as soon as paid a workforce of builders over $200,000 to construct a fork of Uniswap v2, in accordance with a number of sources. Since Uniswap’s code is open supply, one ex-employee felt that the challenge overpaid for the DEX, which turned generally known as BulbaSwap. BulbaSwap at the moment holds round $93 million in complete worth locked, in accordance with DeFiLlama, making it across the Two hundredth-largest DEX by that metric.
The ‘darkish arts’
Morph’s burn charge could have been offset by a deliberate Sequence A fundraise, however a contemporary funding spherical is but to materialize.
“We’re in search of our subsequent spherical,” Hsueh stated in an interview with Web3TV in September, noting that “working a series could be very costly,” and the corporate was seeking to develop its headcount.
Nonetheless, folks acquainted famous that there have been tensions round a Sequence A previous to Khan’s departure. Bai, two folks acquainted stated, pushed for Morph to lift one other spherical.
Blockworks was unable to find out the present standing of the Sequence A.
Even with out the increase, a supply acquainted instructed Blockworks that Morph isn’t out of cash but, and it’s nonetheless backed by Bitget.
Morph didn’t return a number of requests for remark.
In the meantime, Morph has had some hassle retaining expertise. One ex-employee stated it’s confronted a “loopy quantity” of turnover, from departures to layoffs. Some staff have additionally taken wage cuts, others famous.
A number of staff stated they didn’t obtain token contracts. In response to one supply, Morph tried to power some staff who did obtain contracts to signal new ones in Could of final yr which might have modified their vesting intervals.
