A downturn in cryptocurrency markets has prompted several companies to announce layoffs in recent days, leaving thousands of employees without work.
Citing a “dramatic shift in macroeconomic conditions worldwide,” lending platform BlockFi announced June 13 it would reduce its 850-member workforce by about 20 percent, affecting some 200 employees. Singapore-based crypto exchange Crypto.com also announced that it would lay off percent of its employees, or about 260 employees. And Coinbase, the largest U.S.-based crypto exchange, said today it would lay off about 1,100 employees, reducing its workforce by about 18 percent. Crypto exchange Gemini, which is run by the Winklevoss twins, also recently announced a 10 percent workforce reduction, affecting an estimated 100 employees.
The layoffs were triggered by a market downturn dubbed by some as a new “crypto winter,” which has tested the growth outlook in the once high-flying industry. Companies that had announced hiring sprees earlier in the year are now quickly tamping down on these plans.
What’s affecting crypto layoffs?
The value of cryptocurrencies has fallen precipitously since November of last year, when the market was valued at $3 trillion. Since then the price of bitcoin has more than halved, as has the value of ethereum, another popular cryptocurrency.
This volatility, coupled with a downturn in the public stock market triggered by the Federal Reserve’s efforts to tame inflation, has prompted a number of cryptocurrency companies to slow their operations. On June 12 one of the largest crypto lenders, Celsius Network, announced it would freeze all withdrawals, swaps, and transfers between accounts in order to protect its assets. Though cryptocurrency firms doubled hiring from November to April, according to data from staffing firm ManPowerGroup, that pace slowed last month.
Crypto has seen similar downturns before
Thus far crypto exchanges appear to be most affected by layoffs, as fewer retail traders have been coming to their platforms.
This isn’t the first time the cryptocurrency industry has experienced a wave of layoffs. A separate market downturn in 2018, the first crypto winter, led cryptocurrency firms to make sharp staff reductions.
A flurry of venture capital activity may continue to fund opportunities for job-seekers interested in crypto, and other firms, such as crypto exchange FTX, have said they’ll continue to hire workers. In a tweet, FTX CEO Sam Bankman-Fried criticized “hyper-growth” companies, arguing hiring sprees can hamper productivity. As recently as February Coinbase had plans to hire up to 2,000 employees this year.
How these firms handle the downturn is likely to be scrutinized by current and future employees alike. Coinbase CEO Brian Armstrong has drawn flack for telling disaffected employees to quit in response to a worker petition that was circulated days before today’s job cuts. The company rescinded more than 300 job offers last week, leaving some vulnerable hires in limbo.