The crypto market is experiencing one of its longest, most bitter winters in recent history. It has caused a massive decline in the valuation of digital assets and a substantial reduction in overall trading volumes. This has put a lot of pressure on crypto firms, many of which are turning to job cuts to save costs and stay above water. Here's a round-up of some of the top crypto platforms that have announced layoffs in the recent past.
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The latest firm to join the crypto job loss bandwagon is Dapper Labs. Founder and CEO of the firm, Roham Gharegozlou, announced on Wednesday that the firm had reduced its workforce by more than 20 percent. Gharegozlou pinned the layoffs on the current "market environment" and said the reductions were the "last thing" they wanted to do, but they were "necessary."
The NFT market has been in tatters in recent times. Sales figures have declined for six straight months, even slipping below the $500 million mark in October for the first time since July 2021. The downturn has had a rub-off effect on Dapper Labs, with its signature NFT collection, NBA Top Shot, hitting a two-year low in monthly sales.
According to the CEO, the firm also grew too fast, going from 100 employees to 600 in under two years. However, with current market conditions, it became difficult to sustain operations at scale, forcing the firm to adopt dire measures.
Also Read: Explained: NFT stocks and how they work
"I take responsibility for that," Gharegozlou said, while also announcing three-month severance pay, resume and career coaching, a public talent directory, and alumni support for the departing team members.
Besides Dapper Labs, Galaxy Digital is also planning to cut its workforce by 20 percent, according to sources. The crypto-focused financial-services firm has lost 70 percent of its stock value this year. The company also reported a $554 million loss in the second quarter of 2022. Put together, these two factors could be the reason why Galaxy is looking to downsize. Add to that, the firm is also fighting a lawsuit with BitGo. The crypto custody platform alleges that Galaxy Digital breached a merger agreement after terminating a deal to buy BitGo for $1.2 billion.
Another firm that has been downsizing rigorously over the last few months is Crypto.com. According to an AdAge report from October 6, the crypto exchange has let go of nearly 2,000 employees since last summer. This equates to almost 40 percent of its workforce. The exchange has also cut back on its marketing and promotional spends. For instance, it has pulled out of its $495 million sponsorship deal with the Champions League, which is Europe's elite soccer tournament.
The company has also rolled back on sponsorship deals with Los Angeles-based soccer team Angel FC and streaming service Twitch. The firm is still planning to be the official sponsor of the 2022 FIFA World Cup. However, it has cut back on some of its hospitality packages and other benefits it must provide to help facilitate the tournament's operations.
Moving on, payment processing firm Stripe is also looking to let go of 1,000 of its employees in the coming weeks, which translates to 14 percent of its staff. The company was going quite well recently, leading the wave of crypto adoption among payment processing firms. Stripe already allows users to make payments in the USDC stablecoin and is also partnering with OpenNode to facilitate fiat-to-bitcoin payments.
However, macroeconomic factors, including inflation, escalating energy costs, higher interest rates and spiralling crypto valuations, have pushed the firm to take extreme measures. Stripe CEO Patrick Collison said the company needed "to reduce costs," and the decision to downsize would help the firm "adapt" to future requirements.
These firms are not the first to let go of employees this year, and if the current market scenario persists, they definitely won't be the last. As per a study by Moneyweb, crypto companies have cut more than 5,000 jobs since April alone. The industry has also seen several high-profile exits in the last few months, all indicative of the bitter winter the market is currently facing.
However, crypto markets are cyclical, and the hope is that, once prices pick up again, leading crypto firms will go into overdrive trying to recruit the right talent. Until then, all we can do is wait and watch.