Crypto Teams Cut Thousands of Jobs as Market Plummets

Hao Jia was so convinced of the potential of CRYPTOCURRENCIES that he left a job at a large tech company, Oracle, to accept another offer he received in early April to be a software engineer at one of the busiest crypto startups, Coinbase.

But last week, Jia was one of several employees who received an email from Coinbase rescinding their job offers. For Jia, that meant not only losing a job but also possibly a visa.

“I am an international student and I need to keep my visa,” he told CNN Business.

The cryptocurrency industry is in free fall again. (Jakub Porzycki/NurPhoto/Getty Images)

“Now, after Coinbase, I prefer to go to a bigger company because I am worried about my visa.”

After initially planning to hire up to 2,000 more employees this year, citing “huge product opportunities ahead,” Coinbase abruptly changed course.

In recent days, the cryptocurrency exchange, once valued at nearly US$100 billion ($141.9 billion), has rescinded deals, implemented a hiring freeze and laid off 18 percent of its workforce.

In a company-wide email sent to employees Tuesday announcing the mass layoff, Coinbase CEO Brian Armstrong noted a possible impending recession and growth that happened “too fast.” Employees found out they had lost their jobs after being blocked from their work emails.

“I realize that removing access will feel sudden and unexpected, and this is not the experience I wanted for you,” Armstrong wrote.

The sudden change in trading on Coinbase reflects a broader trend in the cryptocurrency sector. A growing number of startups are cutting staff to survive a possible prolonged downturn in the cryptocurrency market and the broader economy, creating a sense of whiplash in the process among the many workers who joined these companies in the belief that cryptocurrencies were the next big thing.

Tyler Winklevoss and Cameron Winklevoss, founders of cryptocurrency exchange Gemini Trust Co. (Marco Bello/AFP/Getty Images)
in a tweet on saturdayCrypto.com CEO Kris Marszalek announced that the Singapore-based exchange will lay off some 260 workers, or 5 percent of its workforce.
Another large exchange platform, Gemini Exchange, announced last week that it would lay off 10 percent of its staff. And the BlockFi crypto lending platform said it is cutting about 20 percent of its workforce.

In public statements, companies have framed the cuts as necessary steps to address a change in economic conditions, amid concerns about rising interest rates and inflation. US stocks plunged into a bear market this week. Recession fears are growing inside and outside the industry.

And cryptocurrencies, once thought to be a hedge against the stock market and inflation, have also tumbled, with Bitcoin falling to just over US$20,000 ($28,380) on Wednesday, down from an all-time high. of nearly US$69,000 ($97,911) in November. .

“It looks like we are entering a recession after a 10+ year economic boom,” Armstrong wrote in his email to Coinbase staff.

“A recession could lead to another crypto winter and could last for an extended period.”

However, in some cases, crypto executives are still trying to double down on their belief in the long-term potential of the market. As many crypto believers will point out, there have been previous notable recessions over the years, including Bitcoin’s crash in 2018 and a crash in May 2021 that wiped US$1 trillion ($1.42 trillion) worth of cryptocurrency. market in a week. Some industry executives stress that cryptocurrencies always bounce back.

“Constraint is the mother of innovation and tough times are a forced function for focus,” Cameron and Tyler Winklevoss, the founders of Gemini, wrote to the employees.

“The crypto revolution is underway and its impact will continue to be profound. But its trajectory has been anything but gradual or predictable.”

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A fast-growing industry hits the brakes

For many workers, the sudden cuts have been jarring and raise questions about the future of the industry.

Hiring in the cryptocurrency sector doubled between November and April, with two of the three largest employers being Gemini and Coinbase, according to data from ManpowerGroup, a global recruitment firm. Crypto firms raised US$34 billion ($48.25 billion) in funding globally in 2021, eight times more than the previous year, according to data from the consulting firm PwC. Many employees who were drawn to an industry that until recently seemed like a rocket ship are now wondering if and when the good old days will return.

“I was very, very happy when I got the job, and now it’s like I’m grieving the loss,” said a recent graduate who had a job offer rescinded from Coinbase and spoke on condition of anonymity because he feared repercussions. to his career. Another Coinbase quasi-employee who just graduated from college said, “My heart sank.”

While some of these recently laid-off workers include engineers who might be in demand at other companies, they face the prospect of struggling to find new jobs at a difficult time for the tech sector. At a time when corporate America across the board is laying off fewer workers, technology and fintech companies have been hit by a surge in job cuts.

Tech companies laid off more than 4,000 people in May, 781 percent more than the total cuts from January to April. according to the report of Challenger, Gray and Christmas. Meanwhile, fintech companies saw a 268 percent increase in job cuts, according to the report.
The consequences for workers also extend to crypto startups in other countries. At Bitso, one of the largest exchanges in Mexico with more than five million users in Latin America, 80 employees they were laid off at the end of May in reaction to falling markets. Many of the affected workers were recent employees, according to employees.

Executives “are afraid of losing money, and I totally understand that, but it shouldn’t be acceptable to hire someone and then fire them 40 days later,” Murillo Bargas, a laid-off Bitso employee, told CNN Business.

“They should have seen it coming. The crypto winter is not news to anyone.”

“I was in a room with an employee who was hired a week ago so he just did the onboarding stuff and then the next week he was fired,” Lucas Ferreira, now a former Bitso employee, told CNN Business.

“Our workforce decisions are made in the long-term interest of our business to better support our customers and our strategy as a company,” a Bitso spokesperson told CNN Business.

A notable exception to the layoff trend is Binance. Binance announced 2,000 open roles on Wednesday in a tweet from CEO Changpeng Zhao, which appeared to take a dig at the spending of other crypto firms such as Coinbase and Crypto.com.

“It wasn’t easy saying no to Super Bowl ads, stadium naming rights, big sponsor deals a few months ago, but we did it.” Zhao wrote in the ad.

“We’re going into this crypto winter from a position of strength, and there’s really no way we’re going to come out of the crypto winter in a weaker position,” Brian Shroder, CEO of the US branch of Binance, told CNN Business last week, before of the recruitment announcement.

“In the last three days alone, we have interviewed six people from Coinbase and Gemini.”

As for when the crypto winter may end, no one knows.

“That’s the beautiful thing about crypto: It literally ends next week, or we could be in this for over a year,” Shroder said.

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