Industry Failures and Layoffs Continue as Down Market Persists

The crypto world has had its share of rough periods, with the bear market taking its toll across the entire landscape. But it’s not the first time or the last time, as the crypto industry is very familiar with bear markets and extended periods of consolidation.

The last six months, with the death spiral of TerraUSD and the collapse of crypto exchange FTX, have scared investors into expecting a prolonged bear market, much like how the bull market induced an ‘up only’ chant.

But the ongoing market situation isn’t any different from 2018 when crypto prices crashed, several crypto companies closed their doors, and massive layoffs were announced. And as can be seen, significant crypto assets are currently down as much as 75%, while the majority of altcoins have lost 90% to 99% of their value from their peak. There are also warning signs that some cryptocurrency companies are unsustainable, with firms cutting staffing levels drastically and more exchanges shutting down.

Most recently, Japanese social media giant Line Corp announced that it would shut down its U.S. crypto exchange Bitfront. On top of that, new sign-ups have already been suspended, and credit card payments will cease operations in a few months to “continue growing the LINE blockchain ecosystem and LINK token economy.”

Hong Kong-based Atom Asset Exchange (AAX) has already effectively shut down after it deleted its social media accounts and froze withdrawals last month. The platform was hit by losses from affiliated trading unit 10kM Trading. Much like AAX, Hoo.com has also deleted its website after several months of inactivity after halted withdrawal early this year, leaving users’ funds trapped.

While many believe the contagion effect of FTX collapse may be behind us, it might not be the case. In fact, it may be yet to fully materialize, with the full extent of the damage still unknown. We could very well see further falls in prices and another exodus of investors and crypto companies. Thus, only time will tell how bad the fallout from the FTX collapse will be.

Massive Layoffs in Crypto

Smaller cryptocurrency exchanges were among the first to announce job cuts, with most citing the current economic slowdown as a major factor in their decisions. Now, more companies, including major exchanges, have started announcing that they are furloughing employees and hiring freezes.

Bybit is one such crypto exchange that has conducted another round of layoffs. Back in June, about the same time as the Luna fiasco, the first round of staff cutting was made. This week, CEO and co-founder Ben Zhou announced the restructuring plan in the middle of the long bear market – one involving drastically (30%) cutting back on the company’s staff.

Despite a new round of layoffs, the company’s CEO has offered up rosy words for the future of Bybit during the bear market. Zhou said he is extremely thankful for all of their contributions over the years to Bybit, and the firm would not forget them.

Australian crypto exchange Swyftx is yet another one whose CEO, Alex Harper, believes scaling back the size of its staffing percentages will help the platform survive the cold cryptocurrency winter, which has claimed several victims. Swyftx reduced its workforce by 35%, cutting off 90 job positions.

Last month, publicly traded exchange Coinbase (COIN) trimmed 60 positions while Coinbase-backed Rain Financial also made significant cuts to reflect the “operational needs and market conditions.”

Kraken is another major centralized exchange that has laid off about 30% of its headcount, or 1,100 people, “in order to adapt to current market conditions.” Co-founder and CEO Jesse Powell said that slowing growth, prompted by “macroeconomic and geopolitical factors,” had lowered customer demand and, in turn, trading volumes and sign-ups.

This reduction in team size takes Kraken back to where it was a year ago, said Powell adding, “I remain extremely bullish on crypto and Kraken.”

Barry Silbert’s Digital Currency Group (DCG) also laid off about 13% of its staff in November, while Bitcoin financial-services firm Unchained Capital shed more than 600. In the same month, Meta slashed over 11,000 jobs, Web3 gaming studio Mythical Games laid off 10% of employees, Dapper Labs reduced its workforce by 22%, crypto exchange BitMEX laid off 53 employees, and Galaxy Digital cut one-fifth of its workforce, an estimated 170 employees.

Sam Bankman-Fried’s FTX also filed for bankruptcy on Nov. 28 and has shed several hundred employees in the restructuring process.

In October, Crypto.com downsized by 2,000 employees, crypto trading firm NYDIG laid off about 33% of staff, market maker GSR cut staff by 10%, and Indian crypto exchange WazirX laid off roughly 40% of its staff.

These layoffs may have intensified recently following the implosion of FTX, but they have been going off throughout this year, especially in June and July after the TerraUSD collapse.

During these two months, crypto exchange CoinFLEX, Cosmos-builder Ignite, and Argentinian crypto exchange Buenbit reduced their workforce by 45%-60%. Meanwhile, Blockchain.com, NFT marketplace OpenSea, Huobi Global, and Bybit cut 20% to 30% of staff. Compass Mining, Gemini, and Bullish.com have downsized staff by 10% to 15%.

Crypto lender Celsius Network, Brazilian crypto unicorn 2TM, and Australian crypto exchange Banxa have laid off about 100 employees during the same period. In the month of June, though, Coinbase cut staff by 1,100, BlockFi by 400, and European crypto exchange Bitpanda by 270.

Fintech startup TrueLayer, Validator Stakefish, social media giant Snap, crypto miner Core Scientific, broker Robinhood, Latin American crypto exchange Bitso, and crypto exchange BitMEX also slashed jobs this year.

Looking Ahead

These latest major industry-wide job cuts in a time of tumult shaking the cryptocurrency markets put the industry at number 10 in terms of layoffs across the broader technology industry for 2022.

In a report released in November, CoinGecko revealed that crypto sector layoffs make up 4% of the whole tech industry for the year. The large number of companies making cuts indicates the current slowdown is not merely a blip in the crypto story.

Amidst this, some, like Ripple Labs, are still hiring, while Binance remains the only exchange for having expanded operations in a bear market.

Retail investors may be bearish, but there are signs the cryptocurrency sector is better off than it was four years ago. While the bearish market is not great for investors, some bright spots may allow for the industry to ultimately thrive going forward.

While the cryptocurrency market is shrouded in uncertainty, the underlying technology is sound and has the potential to revolutionize the financial system. Not to mention, there is still a lot of potential for innovation in the digital currency space. We are still in the early stages of this technology, and there is much room for improvement. We will likely see even more growth in the digital currency market as technology evolves.

Furthermore, crypto adoption is ever-rising, and once the crypto sector bottoms, prices will also rebound. Also, the bear market is forcing projects to focus on fundamentals and become more sustainable. In the past, many crypto projects have been built on hype and speculation. But now, with prices decreasing and investor patience wearing thin, projects are forced to focus on delivering real value.

So, while the crypto bear market may be challenging in the short term, it is actually setting the stage for a more mature and sustainable industry in the long run. And that’s a good thing for everyone involved.