NFT Marketplaces, Exchanges, Payment Service Providers and Banking Firms Increasingly Seek Leaner Staff

Layoffs and workforce readjustments themed the tech industry last year, especially in the second half, as players, regardless of size and revenue, grappled with cutting costs amid strained financials fashioned by a worsening macro-economy.

Though the new year has been friendly in the market as to gains witnessed thus far, the redundancy narrative has prevailed at an even more aggressive pace. Citing a source in the know, CoinDesk reported on Tuesday a planned staffing cut by MetaMask developer ConsenSys. The report estimated that about 100 employees will be laid off. Last week, crypto-focused bank Silvergate announced laying off two-fifths of its staff. At the same time, HTX acknowledged it plans to cut 20% of its global headcount despite prior denials by advisory board member Justin Sun.

Crypto industry licks wounds following brutal battering in 2022

The past six or so months have seen a chunk of staff dismissals in the space, led by centralized trading platforms. Barring Binance, which grew dominant and announced job openings across 2021, these crypto firms, entities or subsidiaries have been resolutely trimming costs.

Centralized exchanges lead to renewed mass cuts

When Kraken said last November that it was letting go of 1,100 employees (30% of the total), it termed the decision as one taken to survive the conditions. The exchange attributed the relentless move to a brutal year where macroeconomic and geopolitical factors weighed heavily on financial markets. Things were more or less the same for Coinbase, another digital asset trading platform, which had announced back in June it would be parting ways with about 1,200 employees. The exchange company conveyed in another round of cuts in November that it would be clearing a further 60 jobs. CFO Alesia Haas said that the company is intent on “not wasting a dollar,” adding that it is ready to take further cost-saving action should it deem necessary.

In a separate announcement in early December, ByBit CEO Ben Zhou said that the exchange was downsizing its employee roster to navigate through the deepening waters of the bear market. This came after slashing the employee numbers by 30% five months earlier. Around the same time, Australian crypto exchange Swyftx said goodbye to 90 staff members to effectively manage its operating costs better and preserve the trust and confidence of the clients.

A reflection of the sector

Centralized trading platforms are considered by many as the primary entry point for crypto and this calls for the need to adapt to the market demand. As part of their business and development strategies, they hire more staff during times of growth and lay off some when the downturns come knocking. This flexibility allows them to meet market expectations during booms and busts alike.

Coinbase lets go 950 employees, aiming to slash operating expenses

CEO Brian Armstrong earlier today announced that the exchange is slashing its staff count by 950 employees in a second wave of job cuts aiming at reducing its operational costs by 25% quarter over quarter. Armstrong sympathized with the affected employees but contends that managing headcounts must be done to reduce company expenses and increase its chances of success. He maintained that Coinbase enjoys a solid financial footing, and the recent developments, to mean the implosion of a major competitor and increased regulatory clarity, will positively impact its long-term strategy. However, these changes may take time to materialize; therefore, implementing and maintaining operational efficiency measures to withstand market downturns while capitalizing on emerging opportunities is crucial to preserve the company's financial stability.

The latest round of layoffs shrank the staff by 20%, after the previous dismissal that reduced the employees count by 18%. According to a filing with the SEC, Coinbase approximates that the layoffs exercise could run well into Q2 this year and cost the company as much as $163 million in restructuring expenses. This would include “$58 million to $68 million in cash charges related to employee severance and other termination benefits.” In addition to the layoffs, Coinbase is shedding off the least promising projects from its portfolio to trim operational costs, though the published blog didn't specify those affected.

Swyftx scraps its crypto Earn program, citing regulatory uncertainty

In other news, Australian crypto exchange Swyftx announced the closure of its crypto yield earning offering – Earn – today, citing a “constantly changing regulatory landscape.” The digital asset trading firm acknowledged that though the decision may be “disappointing,” it was taken in the interest of the exchange part of the business. The firm left the door open for a future reboot of the program. Towards the end of last month, Swyftx detailed that all the remaining user balances in the Earn accounts would be reinstated in the respective wallets. It clarified that the decision wasn't financially-motivated, adding that it would continue working with the relevant entities to achieve a stable regulatory environment for crypto.

Signs point to Swyftx playing it safe given that the Australian Securities & Investments Commission (ASIC) hasn't been lenient on products it considers unregistered offerings, not to forget that the government promised to ramp up crypto regulations this year in the wake of the FTX implosion. The Australian watchdog has been hot on the heels of crypto-indulgent firms in the region, including financial information company Finder.com for offering an unlicensed crypto yield product, Finder Earn, and fintech company Block Earner for a similar violation.

Wyre Payments limits user withdrawals ahead of its closure

Crypto payments firm Wyre Payments, which is reportedly winding down operations by the end of January after a botched $1.5 billion acquisition by Bolt last September, has now modified its withdrawal policy. The crypto infrastructure firm said it imposed curtails to withdrawals at 90% of the current user account holdings, subject to daily limits. Wyre explained that the decision was taken in the best interests of the community as it explores strategic options to help it survive this bear market.

Chaos within HTX pushes HTX Korea to seek severance of ties

HTX Korea, a subsidiary of exchange HTX, is seeking autonomy after it purchased a stake held by HTX. The unit plans to break ties with its parent company and change its name, according to a report by South Korean news outlet News1. The decision was reached due to difficulties the subsidiary has faced as a result of domestic regulations and its association with HTX. Most notably, when the mother company changed its headquarters last year, the Korean unit had to halt operations for five months, pursuant to regulatory requirements.

Furthermore, HTX's Proof of Reserves December report, which revealed that 43.3% of the exchange's reverses were in its native HT token, hastened HTX Korea towards its resolution to part ways, according to the outlet. HTX has also recently undergone changes to its organizational structure, conducting laying offs and allegedly facing an employee revolt for imposing salaries in stablecoins USDT or USDC for its staff, and threatened to terminate those who wouldn't comply with the requirement. For this strategic move to materialize, Chairman Cho Kook-bong is looking to recoup all subsidiary shares, 72% of which are owned by HTX co-founder Leon Li.

Silvergate lost $718 million selling debt to satisfy $8.1 billion in withdraw

Fintech bank Silvergate Capital's shares bled heavily last Thursday after it released preliminary results for Q4 2022. The Wall Street Journal reported that the company had to liquidate its crypto holdings at a loss and cut its staff by 40% (200 employees) to cover $8.1 billion in customer withdrawals in the fourth quarter. The bank sold $5.2 billion in debt, a trade that slapped it with a $718 million loss. It also halted plans for its proprietary digital currency, resulting in recognition of an impairment charge of $196 million for the Diem technology it acquired for the purpose.

CEO Alan Lane said that the measures it took are to provide a buffer against the volatility and it has now restored more cash than its digital asset-related deposits. The bank, heavily invested in digital assets, explained the situation as “a crisis of confidence” in the space after the FTX collapse. However, it has been able to withstand a significant decline in deposits. This is down to its strategic shift towards serving as a specialized financial institution for the crypto industry. With a large proportion of its deposit base – approximately 90% – originating from the crypto sector and a strong focus on maintaining liquidity through holding cash or easily tradable securities, the bank has positioned itself to weather market fluctuations effectively.

SuperRare slashed staff by 30% last week

Non-fungible token (NFT) marketplace, SuperRare, last Friday communicated the decision to shrink its staff, relieving 30% of them, amid tough operating conditions. The project’s executive John Crain admitted that the company was on the path to unsuitable growth after hiring more than needed, hence needing to cut some of its team members. The marketplace's headcount reduction announcement came in the same week as HTX exchange and crypto lending firm Genesis which laid off part of their staff.