Industry Layoffs Ramp Up as Market Woes Continue

Any hopes of this current bear market being a short blip before a return course upwards have become all but non-existent.  Due to inflation, rising interest rates and more – each expected to linger into the foreseeable future – companies involved in digital assets are beginning to get their ducks in a row.  Unfortunately for many, this means a dwindling workforce as layoffs become commonplace.  The following are a few developments from recent weeks highlighting this shift from years of growth to strategic contraction.

A Growing Crop

In the past few months, we have already seen examples of these layoffs, with companies like Robinhood, Bitso, Buenbit, and more taking part.  Now, even the major players within the sector are feeling the hurt, beginning with…

Coinbase

One of the most recent, and largest round of layoffs comes out of industry giant, Coinbase.  The company’s CEO, Brian Armstrong, penned a letter on June 14th, outlining why Coinbase is opting to implement cost cutting measures.  Citing a need for efficiency and pared down expenses, the following were provided as reasons for being in its current situation.

• Looming recession and crypto winter
• Down market requiring altered approach for survival
• Over-hiring in an attempt to scale with the market

Those affected will total upwards of 1100 (18% of workforce), with no details on how those affected were chosen.

Crypto.com

Meanwhile over at Crypto.com, CEO Kris Marszalek recently took to twitter, announcing that the company would be laying off roughly 260 (5% of workforce).  Here, “continued and sustainable growth for the long term” was provided as a reason for the decision.

Despite this announcement, Marszalek still has faith in the sector, stating, “We will continue to evaluate how to best optimize our resources to position ourselves as the strongest builders during the down cycle to become the biggest winners during the next bull run”

He continued, “The markets will turn, and when they do, you can be sure that we will be ready to drive and capture the next wave of growth for cryptocurrency adoption.”

BlockFi

Topping both Coinbase and Crypto.com, by the numbers, is lending platform BlockFi.  The company states, “We are reducing our headcount by roughly 20% and the reduction impacts every team at the company. This decision was driven by market conditions that have had a negative impact on our growth rate and a rigorous review of our strategic priorities.”

This decision was made with one major goal in mind – achieve profitability.  BlockFi indicates that this is just the latest in a series of moves dating back to the beginning of 2022, taken with the goal of eliminating expenses.  BlockFi CEO, Zac Prince outlined what these steps have included in a recent tweet.

Source: Twitter @BlockFiZac

From a public perspective, BlockFi indicates that there will be no, “disruption to our [BlockFi] platform, products or services.”

Gemini

Where some are still only flirting with the potential of another ‘crypto-winter’, it would appear as though the Winklevoss twins believe it is already here.  As such, Gemini has joined the crop of companies streamlining its operations, through the decision to layoff roughly 10% of its employees.

Despite sharing this development, Gemini also echoes its rivals belief that the future of digital assets remains bright.  The twins stated, “The crypto revolution is well underway, and its impact will continue to be profound.”

The Exception

While everyone seems to be zigging, one of the few zagging appears to be digital asset exchange FTX.  Rather than laying off scores of employees, the company indicates that it is taking a more measured approach to market condition, dating back to early 2022.

FTX CEO, Sam Bankman-Fried, recently released a barrage of 18 tweets explaining how its longstanding approach will allow for it to continue growing during a period of widespread contraction.

Source: Twitter @SBF_FTX

Time will expose which other companies were over-zealous in their hiring habits during the most recent bull market.

While those taking part in layoffs must learn to function again with pared down teams, its just another day at FTX.  Meaning it should be well positioned to continue building out services to help the sector during the looming crypto winter.

Echoes of Crypto Winter

Only months removed from an extended bull market, many companies within the digital securities sector remain with a bloated workforce.  Those listed above are only the first to take such steps to remedy this.

While there may be a select few companies which opt to attempt continuing along a growth trajectory, the growing list of companies doing otherwise bring forth echoes of 2018’s ‘crypto-winter’.  This extended and pronounced bear market saw many firms at the time cut significant portions of their workforce.

With the performance of digital assets in 2022 woeful at best, and continuing macroeconomic stressors, it is looking increasingly likely that a repeat of the market conditions of 2018 may have returned, along with the need for companies to re-evaluate a path forward..