I think the answer is this. The veteran developers have seen so many boom and bust cycles that they automatically assume the worst, and their assumption is reinforced by the obvious aura of panic surrounding the COO. They expect failure, and, expecting it, they hunker down, centralizing knowledge, refusing responsibility, staying invisible, so that when the bust comes they'll be safe.
If I were empowered I'd fire them today. There'd be a crisis, but, the chance of success would be higher by far.
It's not possible to respect people who root to lose.