[Feature] Laying-Off Spree Sweeping the Crypto Industry. What’s Going on?

(*Updated)

In case you have not noticed, the crypto universe seems to be laying off staff faster than Terra’s crash. In the first half of the year, multiple major players declared bankruptcy or succumbed to liquidations while others have been finding ways to survive by cutting costs where necessary. What was slashed then? Headcount.

Devin Finzer, co-founder and CEO of OpenSea acknowledged in a note he shared in a tweet (see below) about laying off 20% of the team that "the reality is that we have entered an unprecedented combination of crypto winter and broad macroeconomic instability, and we need to prepare the company for the possibility of a prolonged downturn.”

Devin Finzer, co-founder and CEO of OpenSea tweeted on 15 July that they are letting go of 20% of their team

To say that the crypto winter or the bear market is harsh, is an understatement. Even as we come to the last quarter of the year, layoffs seem to be in full swing. Just in the past few days, a handful of large crypto firms have either reduced or intend to decrease their manpower.

Based on Bloomberg’s report, the crypto financial services firm founded by Michael Novogratz, Galaxy Digital, is reportedly exploring eliminating "as much as 20% of its workforce against the backdrop of a digital-assets market downturn". According to people familiar with the matter, "the plan under consideration could still be changed and the final number could be in a range of 15% to 20%". Galaxy's spokesperson Michael Wursthorn had this to say about the latest development, "While our industry continues to face macroeconomic headwinds, Galaxy remains focused on building for the future state of institutional adoption, and on enhancing long-term shareholder value." Interestingly, Novogratz was a backer of Do Kwon's Terraform Labs. He acknowledged in July, that he was "darn wrong" about the magnitude of the leverage in the system.

Cryptocurrency exchange and derivative trading platform BitMEX, has reduced its workforce though the extent of the layoffs was not revealed; a report stating that 30% of its staff had been let go was dismissed by a BitMEX spokesperson. "As an undesirable consequence, we had to make changes to our workforce. Our top priority is to make sure all employees who will be impacted have the support they require,”BitMEX mentioned in a statement.

The changes were made after the departure of CEO Alexander Hoeptner just last week. He had joined in late 2020

The staff at Digital Currency Group (DCG), a crypto venture capital company, was not spared either ─ as a part of its restructuring, about 13% of its staff were laid off. "We recently made a series of internal changes to position DCG for its next phase of growth, including a streamlining of our departments alongside several promotions on our leadership team," said a spokesperson. In case you are not aware, DCG is the parent company of CoinDesk, as well as Grayscale Investments and Genesis Trading ─ Genesis cut a significant number of its staff in recent months due to massive losses after Three Arrows Capital filed for bankruptcy.

Dapper Labs, one of the NFT industry's biggest names, also announced two days ago that it is laying off 22% of its staff, citing "today's macroeconomic environment" as a reason. On-chain data shows that market interest in Dapper Labs' products is on a decline. Roham Gharegoziou, founder and CEO of Dapper Labs, explained in a blog post that "these reductions are the last thing we want to do, but they are necessary for the long-term health of our business and communities.”

Just within the start of this month, there had already been a handful of such layoffs (or plans to cut). As of this year, the layoffs come in waves almost every month and the tide does not seem like it will turn anytime soon. Some of the more prominent cases include Crypto.com downsizing its headcount by 2,000 employees last month, Snap disbanding its Web3 team and laying off 20% of its staff in September; Robinhood slashing about 23% of its workforce in August; OpenSea laying off roughly about 20% of its staff in July; Coinbase cutting off about 1,100 employees in June; all these are just the tip of the iceberg.

*The year may be coming to an end but it does not seem like the chopping off of headcount is nearing its end. Besides Galaxy Digital, DCG, BitMEX, and Dapper Labs, November had been yet another unforgiving and brutal month of laying off manpower:

- Stripe cut 14% of its staff which equates to over 1,000 jobs. Its CEO Patrick Collison, blamed macroeconomic factors such as inflation, rising energy prices and higher interest rates for the layoffs, and said that"to adapt ourselves appropriately for the world we're headed into, we need to reduce our costs.”

- Mythical Games let go off 10% of its staff, citing the economic downturn, likely exacerbated by the harsh crypto winter, as the reason for the layoffs. "[We] have had to reevaluate and restructure some areas in our business accordingly," said a spokesperson from Mythical. "Unfortunately, as a result, we had to make the painful decision to let some of the members of our team go."

- META laid off about 13% of its workforce (over 11,000 employees), and said that the job cuts were across its apps and Reality Labs segments. Meta also said that Reality Labs' operating losses in 2023 will continue to grow significantly year-over-year.

- Coinbase Global laid off more than 60 people as the company continues to reevaluate its headcount amid the ongoing downturn for the industry. A Coinbase spokesperson explained that the reductions occurred on the company’s recruiting team along with its institutional onboarding unit. “These are isolated and targeted actions by two teams to help Coinbase operate as efficiently as possible,” the company spokesperson said.

- Unchained Capital reduced its workforce by about 15%. In a blog post discussing the jobs cuts, co-founder and CEO Joe Kelly said that while Unchained has never had exposure to FTX, Alameda or any other institutions that have lost client funds, "funding for bitcoin-backed loans has been materially constrained by recent market events."

- A crypto exchange with operations in Argentina and Brazil, Lemon Cash, cut 38% of its workforce – about 100 employees – citing the challenging industry environment and the lack of a clear recovery horizon in the venture capital market.

- At the end of November, it was reported that Kraken was laying off 30% of its global staff – around 1,100 people – in response to the crypto market downturn.

Coming into the festive month aka December, the laying-off spree sees no light at the end of this dreary tunnel. Just last Sunday, CEO Ben Zhou of ByBit announced on Twitter that Bybit will implement another round of job cuts as it tries to refocus its operations amid a "deepening bear market." A screenshot of a message in which Zhou said the layoffs would affect 30% of staff, taken from the company's internal messaging platform, was floating around Telegram group chats on the same day.

Swyftx, an Australian crypto exchange, said yesterday that the firm had cut 90 jobs because of the crypto market downturn. The exchange had 259 employees before the layoffs, which would imply that Swyftx is reducing 35% of its total workforce, according to a spokesperson.

GameStop announced that it has laid off another round of employees today ahead of its upcoming earnings report, according to reports and social media posts from affected individuals. GameStop's Lead Software Engineer Daniel Williams posted on LinkedIn earlier today that there was“another big round of layoffs at GameStop currently in progress,” including ecommerce product and engineers employees—”lots of them,” he added.

This looks like the year of crypto and tech layoffs. Hopefully a brand new year will bring better tidings but only time will tell.