Original Title: Morph, Bitget's L2, is stymied by founder disputes, lavish spending and power struggles: Sources
Original Authors: Katherine Ross & Jack Kubinec, Blockworks Authors
Original Translation: Rhythm's deep dive

Editor's Note: The article points out that Bitget's incubated L2 Morph is hindered by internal issues, including conflicts among founders, high spending, and the influence of a mysterious "shadow CEO" Forest Bai. In March 2024, Morph completed a $20 million seed funding round, but faced challenges such as low mainnet transaction volume, delayed token issuance, layoffs, executive departures, and an unclear strategic direction.

The following is the original content (slightly reorganized for readability):

Some employees of Bitget's new blockchain Morph initially believed that this L2 could become a future competitor to Coinbase Base.

However, sources familiar with the project informed Blockworks that Morph has been hindered by internal turmoil. Sources stated that since completing a $20 million seed funding round in March of last year, team conflicts, flashy spending, and a mysterious "shadow CEO" have led to layoffs, delays, and a loss of direction.

Blockworks spoke with a dozen current and former employees, who were granted anonymity, to share candid details of one of Bitget's most publicly ambitious internal missteps.

Origin of Morph

Cryptocurrency exchanges are the largest application in the crypto space. One way these digital asset giants leverage their popularity is by launching their own blockchain.

Binance first introduced BNB Chain in 2020. Coinbase launched a Layer 2 on Ethereum named Base in 2023. Kraken, OKX, and Gate.io have all built or are building blockchains.

These chains can bring in substantial profits. According to Blockworks Research data, Base generated $76 million in gross profit in 2024.

It is in this context that L2Morph, incubated by Bitget, the world's tenth-largest spot trading exchange by trading volume, has become a hot project. However, unlike the traditional entrepreneurial model where two co-founders collaborate around a single idea, L2Morph's two co-founders did not know each other but were paired together.

The Morph team brought in Azeem Khan, based in the United States and formerly the Head of Influence at Gitcoin, as well as Cecilia Hsueh, reportedly based in Singapore according to her LinkedIn profile. Hsueh previously served as the Chief Marketing Officer of the crypto exchange Phemex and briefly held the position of CEO. She was appointed as the CEO of Morph, with Khan serving as the COO.

The initial outlook was promising. As crypto fundraising began to rebound, Morph raised $20 million in seed funding from the American venture capital firm Dragonfly. Other investors included Pantera, MEXC Group, Bitget's venture capital arm Foresight Ventures, and Spartan Group.

Bitget and Foresight Ventures did not respond to multiple requests for comments. Dragonfly and Pantera declined to comment when contacted.

Morph's mainnet went live at the end of October last year. According to Morph's blockchain explorer, the L2 recorded approximately 16,000 transactions on May 12th (Monday). In comparison, according to Blockworks Research dashboard, Base averages transactions in the millions daily.

Launching is only half the battle. Former employees recalled that another significant goal was to launch a token, a goal that has yet to be achieved.

Last month, Morph hinted that those who minted the so-called "Platinum NFT" would "lock in their position in the ecosystem at a $5 billion FDV and unlock 50% of the tokens at TGE."

According to sources familiar with the matter, the seed round funding in March 2024 valued Morph at $125 million.

However, since the fundraising, Bitget's L2 has experienced a year of turbulence.

"Ghost Founders"

As Morph expanded its team and tried to launch a functioning blockchain, cracks appeared in its leadership.

Insiders described the tense relationship between Hsueh and Khan, the two co-founders who did not know each other before being appointed as co-founders.

When contacted by Blockworks, Khan declined to comment.

Bitget's U.S. operations are unavailable, but according to company data, strong growth has been achieved in Africa, South Asia, and Southeast Asia in recent years. Co-founder Azeem Khan explained in an interview with CoinDesk last year that Morph was initially designed to serve global southern users not covered by other exchanges' blockchains.

Multiple sources said Khan and Hsueh were not always in agreement on strategy. Khan discussed emerging markets in the media, but former employees recalled that progress on these initiatives was slow internally. One source said a team that had planned activities for these markets for months was told there was no budget.

Strangely, employees speaking with Blockworks felt that Khan and CEO Hsueh did not always have the final say.

One employee described Khan more as a "phantom founder" than a true co-founder, saying they had never seen a similar situation in their crypto career.

Many decisions seem to be held by Forest Bai, the co-founder and partner of Foresight Ventures (Bitget's venture arm and Morph's investor), as well as the chairman of The Block. Multiple sources confirmed that Bai is like a "shadow CEO." Sources noted that he has oversight on expenditures and company strategy.

In March, Khan announced his departure from Morph, stating in an X post that resigning was "the best way forward for me." He subsequently became a co-founder of another blockchain company called Miden.

Multiple insiders said that the lack of consistency and independent decision-making led to Khan's departure.

Hsueh continues to serve as CEO—although three sources told Blockworks that her internal power is said to have further weakened in recent months.

Who Really Holds Power?

Almost everyone Blockworks spoke with described Hsueh as having a limited understanding of the technical details of blockchain technology. While executives do not need to be crypto natives, sources said that Hsueh is out of touch with blockchain users and lacks interest in learning the technology, leading to Morph's lack of a clear strategic direction.

Sources said that Hsueh instead focused on boosting her online presence. Three former employees recalled being asked to engage with her posts. Others added that Hsueh would prioritize posting Morph announcements on her personal account rather than the official one.

At one point, Hsueh even posted a photo of her foot on X.

It is currently unclear how much power Hsueh still holds, with one former employee describing her as "indestructible."

While she is listed as the CEO in company documents, an internal org chart shared with Blockworks shows that Forest Bai, the co-founder of Foresight Ventures, is named alongside her.

A screenshot of Morph's org chart showing the roles of Bai and Hsueh

Hsueh and Bai did not respond to requests for comment via email or messages.

Three sources said Bai has strengthened control in recent months—reportedly having formally joined the company's Slack—while others noted that before Khan's departure, Bai held influence over both Khan and Hsueh. According to internal Slack messages seen by Blockworks, Bai was formally listed as an advisor.

Another internal Slack message seen by Blockworks requested Bai's presence at ecosystem and marketing team meetings.

Trade or No Trade?

Four sources said that Morph is a big spender in 2024. Of course, the company just completed a $20 million financing round.

However, expenses include activities with the K-pop band tripleS, with one source telling Blockworks that Morph purportedly covered the band's travel and accommodation costs. An invitation on Lu.ma (a popular site for planning post-event activities) shows that in April of last year, an event hosted by Zircuit, Bitget, Morph, Foresight Ventures, and Quantstamp featured a "special performance" by tripleS.

Multiple sources discussed Morph spending hundreds of thousands of dollars on a cryptic conference event. At Token2049 in Singapore, Morph held a full-day side event at the Singapore Art Science Museum, sources pointed out. An invite from Lu.ma showed that attendees at the event included Vitalik Buterin, Stani Kulechov from Avara, and Mo Shaikh from Aptos, with renowned Korean DJ SODA as the party's headliner.

Another source noted that the lavish event spending did not align with the investment return or bottom line. Insiders told Blockworks that despite the seeming funds being available for the event, Hsueh seemed unwilling to greenlight actual business transactions.

One insider mentioned that a highlight of the company's spending was Morph initially providing competitive compensation to employees.

In addition to the event, three sources told Blockworks that Morph had discussed setting up a physical office in New York City, ultimately leasing space on the 77th floor of the One World Trade Center.

The office also shares space with Foresight and The Block, although it is unclear who the tenants are.

On the development front, multiple sources mentioned that Morph had paid a development team over $200,000 to build a fork of Uniswap v2. Since Uniswap's code is open source, a former employee believed that the project overpaid for this decentralized exchange (DEX) called BulbaSwap. According to DeFiLlama data, BulbaSwap's current total value locked (TVL) is around $93 million, ranking it about 200th among DEXs.

「Dark Arts」

Morph's burn rate may be alleviated by the planned Series A funding, although the new funding round has not yet materialized.

In a September interview with Web3TV, Hsueh said, "We are looking for the next round of funding," noting that "operating a chain is very expensive," and the company aims to expand its workforce.

However, sources pointed out that there was tension around the Series A funding before Khan's departure. Two sources stated that Bai was pushing for another round of funding for Morph.

Blockworks was unable to confirm the current status of Morph's Series A.

Even without funding, a source familiar with the matter told Blockworks that Morph has not yet run out of funds and still has the support of Bitget.

Morph did not respond to multiple requests for comment.

Meanwhile, Morph has encountered some challenges in retaining talent. A former employee stated that the company is facing "astounding" employee turnover, ranging from resignations to layoffs. Others pointed out that some employees have also experienced pay cuts.

Several employees mentioned that they have not received token contracts. One source claimed that Morph tried to compel some employees who had received contracts to sign new ones in May last year, which would alter their token vesting period.

Another source informed Blockworks that the employee exodus has left some teams understaffed, with some Slack channels seeing minimal activity. Despite the challenges, a source familiar with the matter stated that Morph still plans to launch its token by the end of this year.

For investors, Morph's redemption may lie in its connection with Bitget, which may still be enthusiastic about listing trades when Morph's token is about to be released.

A former employee stated that Bitget is well-versed in the "dark art" of operating in a token trading landscape where the value is questionable.

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