BlockFi, a platform for trading and lending cryptocurrencies, announced via a blog post on Monday that it will lay off 20 percent of its 850 employees, around 170 to 200 people. CEO Zac Prince said in a twitter thread that the layoffs can be attributed to a “dramatic change in macroeconomic conditions” and BlockFi’s drive to become profitable. It is not the only cryptocurrency company letting workers go. On Friday, Crypto.com (the company with the LeBron James Super Bowl ad) announced that it will lay off about 260 workers, or about five percent of its workforce, according to a Twitter thread from its CEO, Kris Marszalek. It could be a “crypto winter”
We will continue to evaluate how to best optimize our resources to position ourselves as the strongest builders during the down cycle to become the biggest winners during the next bull run.— Kris | Crypto.com (@kris) June 11, 2022
The layoffs come as the crypto market is struggling as a whole. The value of Bitcoin and Ethereum has been falling throughout Monday morning, and Celsius, a lending platform, has halted withdrawals, citing “extreme market conditions.” (BlockFi has specifically said that it “has no exposure to Celsius” on Twitter.) Binance, a large cryptocurrency exchange, halted Bitcoin withdrawals for about three hours. citing a glitch, and in recent months, we’ve seen coins like Terra essentially go to zero. Crypto companies have struggled to weather the storm. Coinbase announced that it was slowing down hiring in May and reportedly terminated more than 300 job postings the next month; several other companies, such as Gemini, Mercado Bitcoin and Bitso have also had to lay off at least 10 percent of their workers in the last month. BlockFi says in its post that the layoffs come after a period of explosive growth. The company says it had “around 150 employees” at the end of 2020 and has since grown to a headcount of “more than 850”. However, after the layoffs, the company will be reduced to around 600 employees. Similarly, Crypto.com was at the top just a few months ago. In November 2021, he reportedly paid $700 million to put his name on a sports arena in Los Angeles, formerly known as the Staples Center. “For years to come, people will remember this moment as the moment when cryptocurrencies crossed the chasm into the mainstream,” Marszalek told the Los Angeles Times when the name deal, which is supposed to last 20 years, was announced. It’s easy to see why crypto companies have been hiring; The space has exploded during the pandemic with the prices of major coins skyrocketing, NFTs exploding onto the scene, and celebrities and businesses hyping blockchain. But, as 2022 progressed and interest rates rose, growth began to reverse; Trillions of dollars in value have been wiped out of the crypto market, NFT sales have plummeted, and companies including BlockFi have run into trouble with regulators as governments try to figure out how to handle cryptocurrencies. Not everyone who bought into the boom made it, with many in the space predicting a “crypto winter.” Both BlockFi and Cypto.com cite macroeconomic conditions or the general bear market that has seen stock prices fall as a whole. And, in fact, they are not the only companies struggling; other tech and finance-related companies like Klarna, Netflix, Tesla, Cameo, and Better.com have also announced sizable layoffs, and we’ve seen companies like Meta begin to slow down hiring. At the end of the day, though, those other companies have appeal beyond a number on a chart: People still need entertainment or transportation. Most consumers have been attracted to crypto businesses solely because they thought they could make money; if that perception changes, the business model could become more difficult to keep afloat.
