The “crypto winter” pushes platforms to apply massive layoffs

The cryptocurrency industry is undergoing an unprecedented workforce downsizing in its short history. The fall in the price of bitcoin, which has lost more than two-thirds of its value since the highs of November, has dragged the entire sector into a severe crisis, to which the Luna/UST fiascoes are contributing — more than 40,000 million volatilized—and Celsius Network—11,000 million in customer funds frozen due to lack of liquidity—as well as the rise in interest rates by the Federal Reserve and the consequent fears of a recession breaking out in the United States.

In this context, some of the main firms in the sector have announced a wave of layoffs in recent days: the American Coinbase will get rid of 1,100 employees, 18% of the workforce; Gemini, the platform for buying and selling cryptocurrencies of the billionaire Winklevoss twins —the same ones who sued Mark Zuckerberg for having “stolen” Facebook from them—, will reduce their workforce by 10%, currently about 1,000 workers; Crypto.com will have 5% fewer staff on payroll, meaning 260 employees will not continue, and BlockFi will divest 20%, leaving around 200.

Some of the top executives of these firms have wanted to explain the reasons that have led them to take such drastic measures. And in several of the messages a term coincides: “crypto winter”, which usually appears when a long period of turbulence is expected. He is mentioned in the Gemini blog post by the Winklevoss brothers. “The crypto revolution is underway and its impact will continue to be profound. But its trajectory is anything but gradual or predictable. […] We are now in the contraction phase […] what our industry calls a crypto winter, “compounded by the current macroeconomic and geopolitical turmoil,” they note.

Brian Armstrong, CEO and co-founder of the American Coinbase, the only cryptocurrency platform listed on Wall Street and one of the industry giants, exposes similar arguments to justify the dismissals on his company’s blog. “A recession could lead to another crypto winter and could last for an extended period. In previous crypto winters, transaction revenue (our largest source of billing) dropped significantly. Although it is difficult to predict the economy or the markets, we always plan for the worst to be able to operate the business in any environment,” says the executive, whose company informed its employees of the exit via email.

Coinbase believes that economic conditions are changing with the risk of a recession, but it does not put all the blame on external factors: it also acknowledges that the company grew too quickly, going from 1,250 at the beginning of 2021 to almost 6,000 today.

The CEO of BlockFi, meanwhile, published a thread on Twitter in which he assured that it is a painful day for the firm he directs, and shows his willingness to help relocate those laid off. “We are working to make sure they find a new opportunity when they are ready.”

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In the midst of this scramble, Binance, the world’s largest platform, is going in the opposite direction. Its founder and CEO, the Canadian of Chinese origin Changpeng Zhao, puffed out his chest this Wednesday. “It wasn’t easy saying no to SuperBowl advertising, naming states or signing big endorsement deals a few months ago, but we did it. Today we are hiring 2,000 people on Binance,” he noted.

The message can be interpreted as a message to some of its competitors, since it suggests that some of its rivals wasted their resources. Up to four cryptocurrency companies paid astronomical amounts to advertise in the intermission of the SuperBowl, including Coinbase, which if it is now forced to make layoffs, then paid almost 14 million dollars for the campaign in the sporting event par excellence in the US. Crypto.com, another of those that is adjusting its staff, paid 700 million dollars to put its name to the Los Angeles Lakers stadium —formerly the Staples Center— for 20 years, a record sponsorship contract that combines with others such as the World Cup in Qatar that takes place this year.


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