After seeing record highs in 2021, the cryptocurrency industry went through a major crisis in 2022. During this crisis, the prices of cryptos such as Bitcoin and Ethereum collapsed, many companies closed, and some even declared bankruptcy. Crypto.com was one of those companies that had to downsize last year. In June, it laid off 5% of its workforce, or about 260 employees.
Unfortunately, the situation worsened. And this week, Crypto.com is announcing an even bigger downsizing. In fact, it is 20% of the employees of this company who will be made redundant. According to estimates relayed by CoinDesk, 700 to 900 employees may leave the company.
A good performing company
In a message to Crypto.com employees, CEO Chris Marszalek says the company performed well. It evokes a “solid balance sheet” along with growth that has allowed it to accumulate 70 million users worldwide. However, the layoffs are justified by “persistent economic headwinds and unexpected industry events.”
Like many companies in crypto and tech in general, Crypto.com overhired after 2021’s performance. However, with the sudden changes of 2022, this one had to be left. According to Marszalek’s explanation, the layoffs announced in June 2022 should have allowed Crypto.com to weather the crisis.
However, when it decided to part with 5% of its workforce, the company did not anticipate the collapse of FTX which, according to the CEO of Crypto.com, “Confidence in the industry has been significantly shaken”. “For this reason, while we continue to focus on prudent financial management, we have made the difficult but necessary decision to make further cuts to position the business for long-term success.”he adds.
Note that like Crypto.com, US market leader Coinbase also announced further cuts to its workforce this January. In 2022, due to the crypto crisis, it had already laid off 1,100 employees, or 18% of its workforce. But that wasn’t enough and a few days ago, it announced further cuts to its workforce of 20%, or 950 employees. The layoffs are part of a 25% reduction in company costs.
To justify this decision, the company raises uncertainty for 2023. “As we reviewed our 2023 scenarios, it became clear that we needed to cut spending to increase our chances of succeeding in each scenario. While it is always painful to be separated from our colleagues, it was not possible to reduce our spending sufficiently without taking into account changes in the workforce.”Coinbase owner Brian Armstrong explained in a message to employees.
Today we announced the difficult decision to reduce our global workforce by approximately 20%.
– Chris Crypto.com (@kris) January 13, 2023