The cryptocurrency industry has announced mass layoffs amid fears of a so-called “crypto winter.” 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 serious crisis. This crisis has been exacerbated by the Luna/UST crash – which wiped $40 billion from investors’ holdings – and the Celsius Network’s decision to freeze $11 billion in client assets due to liquidity problems. Adding to this, are the growing fears of a recession in the United States, and the recent interest rate hike – the largest since 1994.
In response to the crisis, some of the main firms in the sector have announced a wave of layoffs. The US exchange platform Coinbase will sack 1,100 employees, the equivalent of 18% of the workforce. Gemini, a cryptocurrency exchange owned by the billionaire Winklevoss twins – the same ones who sued Mark Zuckerberg for “stealing” the idea for Facebook from them –, will reduce its workforce by 10%, laying off 1,000 workers. The app Crypto.com will cut 5% of staff, or around 260 workers. And BlockFi, a platform for trading and lending cryptocurrency, announced via a blog post on Monday that it’s laying off 20 percent of its 850 employees – around 170 to 200 people.
The layoffs have been attributed to the crypto winter. “The crypto revolution is well underway and its impact will continue to be profound. But its trajectory has been anything but gradual or predictable,” the Winklevoss twins wrote in the company blog. “We are now in the contraction phase that is settling into a period of stasis – what our industry refers to as ‘crypto winter.’ This has all been further compounded by the current macroeconomic and geopolitical turmoil.”
Brian Armstrong, CEO of Coinbase – the only cryptocurrency platform listed on Wall Street –, made a similar argument. “A recession could lead to another crypto winter, and could last for an extended period. In past crypto winters, trading revenue (our largest revenue source) has declined significantly. While it’s hard to predict the economy or the markets, we always plan for the worst so we can operate the business through any environment,” said Armstrong, who abruptly fired around 1,100 employees over email.
Coinbase argued that economic conditions are changing with the risk of a recession, but also acknowledged 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, expressed his regret about the layoffs in a Twitter thread, adding that he would try to relocate the fired workers: “We’re working to ensure they find a new opportunity when they’re ready.”
This morning we announced that after taking significant time to plan and consider, we are reducing our headcount by roughly 20%. This is not a decision we take lightly and is one that brings us great sadness.— Zac Prince (@BlockFiZac) June 13, 2022
But not everyone in the crypto sector is laying off staff. Binance, the world’s largest crypto exchange, is doing just the opposite. The company’s founder and CEO, Changpeng Zhao, announced on Wednesday that it was hiring more staff. “It wasn’t easy saying no to Super Bowl ads, stadium naming right, large sponsor deals a few months ago, but we did it. Today we are hiring for 2,000 open positions for Binance,” he said on Twitter.
The message can be seen as a critique of Binance’s competitors, since it suggests they put the company image before the worker. Up to four cryptocurrency companies paid astronomical amounts for a Super Bowl ad spot. Coinbase, for instance, paid $14 million for a 60-second ad. Four months later, it is firing more than 1,000 workers.
Crypto.com, which is also cutting its workforce spent $700 million for the naming rights of the home arena of the Los Angeles Lakers, formerly known as the Staples Center. Under the 20-year contract, it is now called Crypto.com