Although there was a market rally and a fresh sense of normalcy in the crypto space in the first month of this year, staff layoffs continue to plague the industry. According to a report by Cointelegraph, at least 2,900 crypto staff were laid off across 14 crypto firms in January 2023.
Notably, this cutting of workforce trend is majorly a result of the crypto winter caused by the FTX and Terra implosions of 2022. It is also a general reflection of the tech industry, which has endured a difficult period due to the economic downturn in the last 12 months or thereabouts.
However, it is surprising that despite the recent relief rallies, with major cryptocurrency gains in the new year, crypto firms continue to lay off workers. It remains to be seen whether the waters will be calm or the layoffs will continue to give the crypto industry a hard time.
More on the layoffs of Crypto staff
The largest staff layoff in January was initiated by Coinbase, a crypto exchange which reduced its headcount by around 950 employees on January 10. Crypto.com, Luno and Huobi experienced staff reductions of around 500, 330 and 320 employees, respectively.
Digital Currency Group (DCG), the troubled crypto conglomerate and its subsidiaries, saw significant layoffs, with 485 workers sacked in January alone as the firm finds its way around a financial crisis. Luno, owned by DCG, saw the most layoffs, with around 337 staff affected. DCG subsidiary lending platform Genesis cut 63 jobs, and its asset management firm HQ Digital let go of 26 staff.
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Crypto exchange Luno has a large user base in the African region. With a considerable workforce in Africa, this writer reached out to a handful of Luno employees to know how the layoff affected the African team to find out if the company provided appropriate compensation and is still in an excellent financial state. However, the employees contacted declined to comment on the situation.
Recall that notable African crypto startups were affected by the layoff wave towards the end of 2022. Lazerpay, Quidax and Nestcoin had to slash staff salaries and let go of some when the bitter crypto winter bit harder.
Other crypto companies that let go members of staff in January 2023 include crypto bank Silvergate (200 members), Blockchain.com exchange (110 employees) and Metamask’s parent company, ConsenSys, which terminated 96 staff members.
Reports also say Gemini laid off 100 staff members towards the end of January, and NFT marketplace SuperRare had to let go of 20 members of staff.
Those staff cuts interestingly came during a month when the crypto market witnessed increased institutional demand as bitcoin surged to almost $25,000. However, the large-scale layoffs were not peculiar to the crypto sector.
In January, around 48,000 people from top tech companies like Google, Amazon, Microsoft and Salesforce were let go.
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Cause of the layoffs
The crypto community still hasn’t recovered from the Terra and FTX collapse of 2022. Since the unfortunate events, the blockchain industry could not attract capital and liquidity, with notable firms being insolvent and declaring bankruptcy.
During the bull market run of 2021, crypto companies expanded aggressively in response to the rapid growth in retail investor demand. However, due to the recent tough macroeconomic environment, like high-interest rates and low investment, it has been revealed that firms can no longer sustain their previous excesses.
Conclusion
Although some may believe there’s more gloom ahead, there are indications that the rest of 2023 will bring good tidings for blockchain companies. The industry is gradually moving on from the bear markets with less noise and distraction.
Blockchain is a new concept and is still in the early adoption stage. Firms providing the market’s wants and need still have uncharted waters to explore. As the crypto market continues to recover some of its previous losses, it remains to be seen whether crypto companies will need to take further cost-cutting measures.
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