Crypto.com lays off more employees as Crypto winter deepens

important point

• Digital asset exchange Crypto.com laid off 20% of its global workforce.
• The announcement is the latest in a long line of companies that have scaled back their operations, many citing the fall of FTX as the main reason.
• It’s not all bad as crypto regulation could be introduced and funding remains strong in this sector.

We all know by now that crypto winter is in full swing. As more companies go bankrupt and scandals unfold, the industry can’t seem to stay away from the news headlines.

Crypto.com is the latest victim of the recession, announcing it will lay off 20% of its workforce.

This isn’t the first bear market for cryptocurrencies, but the impact has been significantly exacerbated by the collapse of FTX. Cryptocurrencies are facing not only a recession, but a lack of trust in the industry as a whole.

Let’s take a closer look at what’s going on at Crypto.com, why FTX is involved in mass layoffs, and how the crypto sector is shaping up in 2023.

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things that fell

On January 13th, Crypto.com said in a blog post that it was cutting its workforce by 20%. Co-founder and CEO Chris Marzalek said the shakeout “had nothing to do with earnings” and that the company “had to navigate ongoing economic headwinds and unpredictable industry events.” Told.

The move comes after laying off 5% of its workforce in July 2022. Marszalek remains optimistic, saying Crypto.com executives are “as confident as ever in our mission and vision.”

The layoffs are a stark contrast to the fate of Crypto.com just two years ago. In 2021, the exchange purchased the naming rights to the iconic Staples Center, now named Crypto.com Arena.

“Fortune favors the brave,” LeBron James said in last year’s Super Bowl ad. The company did not disclose advertising spending. Soon after, the crypto market started to drop.

Will other crypto companies be affected?

Crypto.com’s announcement comes just days after Coinbase announced it would lay off 950 people, or about 20% of its workforce.

Both of these companies are doing better than their competitors. Crypto bank Silvergate cut his workforce by 40%, while crypto exchange Kraken announced last December that it was downsizing its company by 30%.

Only one crypto company is bucking this trend. Rumors circulated around cryptocurrency giant Binance, especially after its merger with FTX was called off. To shake them off, the organization went into mass hiring mode, with CEO Changpeng Zhao announcing that Bitcoin would increase its workforce by 15-30% this year.

Other parts of the crypto industry were a disaster. Aside from the FTX elephant in the room, the SEC is suing crypto exchange Gemini and crypto lender Genesis for offering unregistered securities through Gemini’s Earn program.

Gemini founder Tyler Winklevoss (yes, that Winklevoss) describes the move as follows:super lame”. The SEC strike comes after Genesis laid off his 30% of its workforce in 2022.

FTX involvement

Marszalek commented directly on the situation with FTX in a post, saying that while the crypto exchange has taken steps to protect cash flow, it “doesn’t account for the recent FTX collapse, which has severely damaged industry confidence. ‘ said.

The seismic impact that FTX’s downfall has had on the crypto market is hard to ignore: FTX filed for bankruptcy last November. His CEO of Boy-wonder and cryptocurrency darling Sam Bankman-Fried is currently out on bail awaiting trial on charges including fraud and laundering his money.

Former FTX President Brett Harrison blown up Discuss company practices and ethics on Twitter over the weekend. He said, “I began to advocate for the separation and independence of FTX US’s executive, legal, and development teams, but Sam objected.”

More cryptocurrency companies may go bankrupt in the first quarter of this year, blaming the decline of FTX and SBF as the reason for their demise.

What does this mean for cryptography?

Hard times lie ahead, but they are probably not the end. The financial crisis of 2008 caused many companies to go bankrupt. The tech industry has been hit particularly hard, with another pandemic in 2020. With cash readily available again, the sector has grown stronger each time as investors have returned to the market.

The real problem is what Marzarek pointed out: trust in cryptocurrencies. There is no denying that FTX has hit the entire crypto industry. In such a fledgling sector, this level of scandal could come to an end once and for all.

Crypto is always unstable. We’ve seen extreme highs and lows, including his $69,000 Bitcoin price in 2021 and the Terra-Luna crash. Some analysts have given up on price predictions. Despite everything, investors are still betting on crypto.

Is it as bad as it looks?

In a nutshell: not necessarily. When the economy takes a turn for the worse, companies try to cut fat. While this may sound alarm bells in the media, reducing labor is one of the first things to consider when cutting costs. You can read more about Marszalek’s statement, but in his blog post, Crypto.com claimed to have a strong balance sheet.

Elsewhere in the industry, the crypto sector has enough good news to keep the vultures at bay for now.Abu Dhabi-based VC firm Venom Foundation launches $1 billion Web3 and blockchain fund raised. Binance Labs and ABCDE Capital have also announced similar ventures.

Cryptocurrency regulation may increase to avoid another FTX. SEC head Gary Gensler has drawn attention to the industry, saying cryptocurrency companies must either act in line with regulation or face the consequences. While there is much debate about cryptocurrency regulation, the involvement of the SEC could restore confidence in the sector.

Crypto enthusiasts also believe that the dramatic title “halving” will cause Bitcoin price to rise. Bitcoin mining rewards are halved every 4 years. This would reduce the amount of Bitcoin in circulation, theoretically boosting demand. A halving could prove attractive to investors in cryptocurrency companies.

Ciphers are down, but they may not be out.

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