The news came after Ignite’s CEO Peng Zhong announced on Friday he would be leaving the company. According to one of CoinDesk’s sources, Zhong was also joined by other top executives at the firm. Against the backdrop of a contentious re-org, the high-profile exits at Ignite place the firm’s future in question.

Ignite laid off some employees, and others volunteered to leave the company in return for severance packages. It joins other crypto companies hit hard by the sector’s recent collapse, including BlockFi, Coinbase and Crypto.com. But according to CoinDesk’s sources, Ignite’s workforce cuts stemmed not only from recent market conditions but internal factors.

According to the two ex-employees who spoke to CoinDesk on the condition of anonymity, the potential for cuts was first announced by former Ignite CEO, Jae Kwon, when he returned to the company in May.

Kwon, one of Cosmos’ original creators, founded Ignite (then called “Tendermint”) and its parent company, All In Bits, Inc. in 2014. Kwon stepped down as Tendermint’s CEO in 2020 after a widely-publicized dispute with some of its employees, but he retained a seat on the All In Bits board. In May, CoinDesk reported that Kwon would be returning to the company as the CEO of “New Tendermint” – an Ignite spin-off focused on some of Kwon’s side projects.

According to CoinDesk’s sources, when Kwon announced his return at a company all-hands in May, he said severance packages would be offered to some employees.

According to one of the ex-Ignite employees, details about the new organizational structure between Ignite and New Tendermint remained vague for several weeks after they were announced.

Employees were invited to apply to work at New Tendermint, Kwon’s new venture, said the ex-employee. Those who did not apply were told they would be invited to join a reformulated version of Ignite, or a new initiative called Cosmos Cash. According to the ex-employee, Kwon clarified that not all Ignite employees would make the cut.