Some staff at Bitget’s new blockchain, Morph, initially considered the L2 community as a possible future rival to Coinbase’s Base.
However sources acquainted with the mission inform Blockworks that Morph has been stymied by inside dysfunction. Sources declare that since a $20 million seed elevate in March of final yr, workforce conflicts, flashy spending and a mysterious “shadow CEO” have led to layoffs, delays and a lack of course.
Blockworks spoke with a dozen present and former staff who had been granted anonymity to share candid particulars of what went mistaken inside certainly one of Bitget’s most public bets.
Morph’s beginnings
Exchanges are crypto’s largest apps. A method 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 might be profitable. Base generated $76 million in gross revenue in 2024, per Blockworks Analysis.
It was on this context that an L2 named Morph grew to become a sizzling ticket after being incubated by Bitget, the tenth largest change by spot quantity. However as an alternative of following a extra basic startup mannequin the place two co-founders come along with a single thought, Morph noticed two co-founders who didn’t know one another develop into 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 relies in Singapore, based on 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 grew to become chief working officer.
Issues appeared 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 stay in late October of final yr. In line with Morph’s block explorer, the L2 had roughly 16,000 transactions on Monday, Might 12. To place these numbers in perspective, Base averages a number of million day by day transactions, per a Blockworks Analysis dashboard.
The launch was solely half the battle. The opposite massive purpose was to launch a token, former staff recounted, however this has but to materialize.
Final month, Morph teased that folk who mint so-called Platinum NFTs can 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, based on an individual acquainted.
For the reason that elevate, nonetheless, 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 rigidity 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 obtainable within the US, has seen robust progress the previous few years in Africa, South Asia and Southeast Asia, based on firm information. Morph initially aimed to achieve 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 advised they wouldn’t obtain a funds, 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.
A variety of decision-making energy appeared to relaxation with Forest Bai, a co-founder and accomplice of Foresight Ventures (Bitget’s enterprise arm and an investor in Morph) in addition to chair of The Block. A number of individuals 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 publish that stepping down was “the most effective path ahead for me.” He’s since emerged as a co-founder of a distinct blockchain named Miden.
The shortage of alignment and unbiased decision-making energy contributed to Khan’s departure, based on a number of individuals acquainted.
Hsueh has stayed on as CEO — though her energy internally has allegedly waned additional in current months, three individuals advised 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 in regards to the expertise, creating a sense that Morph lacked clear strategic course.
As an alternative, Hsueh was preoccupied with rising her on-line presence, sources stated. Three ex-employees recounted being requested to have interaction along 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 footage of her ft 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 title seems subsequent to hers on an inside group chart shared with Blockworks.
An edited screenshot from Morph’s organizational chart displaying 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 inside Slack messages seen by Blockworks.
One other inside 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 a giant spender, 4 individuals stated. Granted, the corporate had simply finalized a $20 million elevate.
However the spending included occasions with Okay-pop band tripleS, the place Morph allegedly coated the group’s journey and lodging, one supply advised 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 tons of 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 fashionable South Korean performer DJ SODA as the primary act on the afterparty.
The massive 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, individuals acquainted advised 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 advised Blockworks.
The workplace can also 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, based on a number of sources. Since Uniswap’s code is open supply, one ex-employee felt that the mission overpaid for the DEX, which grew to become generally known as BulbaSwap. BulbaSwap presently holds round $93 million in whole worth locked, based on DeFiLlama, making it across the 2 hundredth-largest DEX by that metric.
The ‘darkish arts’
Morph’s burn fee might have been offset by a deliberate Sequence A fundraise, however a recent funding spherical is but to materialize.
“We’re searching for our subsequent spherical,” Hsueh stated in an interview with Web3TV in September, noting that “operating a sequence could be very costly,” and the corporate was trying to develop its headcount.
Nevertheless, individuals acquainted famous that there have been tensions round a Sequence A previous to Khan’s departure. Bai, two individuals 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 elevate, a supply acquainted advised 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 bother 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 line with one supply, Morph tried to drive some staff who did obtain contracts to signal new ones in Might of final yr which might have modified their vesting intervals.
