BlockFi cuts 20% of employees as bitcoin plummets

Crypto lender BlockFi is cutting around 20% of employees as the company expects a dramatic decline in digital currencies and increased concerns about a weakened economy.

CEO Zac Prince so in a tweet Monday that BlockFi has been affected by the “dramatic shift in macroeconomic conditions”, which has had a “negative impact” on growth.

Supported by venture capitalist Peter Thiel, BlockFi has grown dramatically in recent years, taking advantage of low borrowing costs and the rise in crypto prices. Before the recent cuts, the company expanded from 150 employees by the end of 2020, to more than 850.

BlockFi, which offers a popular savings product that allows customers to accumulate interest on their digital currency holdings, has reportedly raised more than $ 957 million since its launch in 2017, and reportedly aimed for a valuation of close to $ 5 billion last year. However, industry publication The Block reported last week that the company was in the process of raising a round value to around $ 1 billion.

Cryptocompanies across the board are looking for ways to cut costs, as investors rotate out of the most risky assets, pulling down trading volumes. Bitcoin is almost half this year after plunging 15% on Monday, while ethereum has lost two-thirds of its value in 2022, plunging 16% to start the week. The crypto market has fallen below $ 1 trillion, down from $ 3 trillion to the top in November 2021.

Crypto.com recently announced a staff reduction of 260 people, so did Gemini, which said it would lay off 10% of its workforce – a first time for the US-based cryptocurrency exchange and custodian. Meanwhile, Coinbase has extended the employment break in the “foreseeable future” and plans to withdraw some job offers.

Celsius, another cryptocurrency lender, has just stopped all withdrawals and transfers between accounts, given the “extreme market conditions.” Celsius has lent more than $ 8 billion to customers, making it one of the largest players in cryptocurrency lending.

BlockFi publicly distanced itself from Celsius in a tweet on Monday, announcing that it “has no exposure to Celsius” and “had never worked with them as a partner”.

Prince said that BlockFi’s main goal is “to achieve profitability” and that the company is “here in the long run.”

In addition to the job cuts, the platform also reduces marketing costs, eliminates non-critical suppliers, reduces management compensation and slows down the number of employees, according to a blog post from co-founders Prince and Flori Marquez.

Prince said customers would not be affected by the cuts.

“Customers will not experience any significant changes in the quality of service they have come to expect, their funds have been taken care of, and all platforms and products continue to function normally.” Prince tweets.

Although it may provide some comfort to people who have entrusted their money to the company, BlockFi has been subjected to increased scrutiny by regulators.

In February, the company agreed to pay a $ 50 million penalty fee to the US Securities and Exchange Commission, as well as an additional $ 50 million in fines to 32 states for settling similar fees associated with its popular interest-bearing cryptocurrencies.

SEE: The crypto market has not reached the bottom yet