BlockFi, a cryptocurrency trading and lending platform, announced via a blog post Monday that it is laying off 20 percent of its 850 employees — about 170 to 200 people. CEO Zac Prince said in a Twitter thread that the layoffs could be traced to a “dramatic shift in macroeconomic conditions” and BlockFi’s drive to become profitable.
It is not the only crypto company letting employees go. On Friday, Crypto.com (the company with the Super Bowl ad featuring LeBron James) announced it will lay off about 260 employeesor about five percent of the workforce, according to a Twitter thread from the CEO, Kris Marszalek.
We will continue to evaluate how best to optimize our resources to position ourselves as the strongest builders during the down cycle to become the biggest winners in the next bull run.
— Kris | crypto.com (@kris) June 11, 2022
The layoffs come as the crypto market as a whole struggles. The value of Bitcoin and Ethereum have fallen all Monday morning and Celsius, a lending platform, has halted withdrawals citing “extreme market conditions”. (BlockFi specifically said it has “no Celsius exposure” on Twitter.) Binance, a major crypto exchange, has paused Bitcoin withdrawals for about three hours, citing a technical problemand in the past few months we’ve seen coins like Terra essentially go to zero.
Crypto firms have struggled to weather the storm. Coinbase announced it delayed hiring in May and has reportedly withdrawn more than 300 vacancies the next month; several other companies† like Gemini† Mercado Bitcoin and Bitso have also had to lay off at least 10 percent of their employees in the past month.
BlockFi says in its post that the layoffs come after a period of explosive growth. The company says it had “about 150 employees” at the end of 2020 and has since grown to a workforce of “more than 850”. However, after the layoffs, the company will be reduced to about 600 employees.
Likewise, Crypto.com was riding high just a few months ago. In November 2021, it reportedly paid $700 million to plaster its name on a Los Angeles sports arena formerly known as the Staples Center. “For years to come, people will look back on this moment as the moment when crypto crossed the divide into the mainstream,” Marszalek says. told the Los Angeles Times when the naming deal, expected to last 20 years, was announced.
It’s easy to see why crypto companies have hired people; space has exploded during the pandemic with prices for major coins skyrocketing, NFTs exploding onto the scene and celebrities and companies hypes up the blockchain. But now that 2022 is over and interest rates have risen, growth has begun to reverse; trillions of dollars in value have been wiped from the crypto market, NFT sales have plummeted and companies, including BlockFi, have gotten into trouble with regulators as governments try to figure out how to handle crypto. Not everyone who bought the tree made it, and many in the space are predicting a “crypto winter.”
Both BlockFi and Cypto.com cite macroeconomic conditions or the general bear market that is given stock prices as a whole fall. And indeed, they are not the only companies struggling; other technology and financial related companies like Klarna, Netflix, Tesla, Cameo and Better.com have also announced significant layoffs, and we’ve seen companies like Meta slow down. At the end of the day, however, those other companies have more appetite than just a number on a map: people still need entertainment or transportation. Most consumers are only attracted to crypto companies because they thought they could make money; if that perception shifts, it will be more difficult for the business model to survive.