Crypto.com Understated Layoffs, Dismissed At Least 40% Of Workforce: Report

In June, Crypto.com CEO and founder Kris Marszalek announced that the exchange was laying off 260 employees, representing 5% of its workforce. But according to a new report, the exchange massively underestimated its layoffs, and it has quietly let go of over 2,000 employees as trading volume dries up in light of the ongoing bear market.

Crypto.com shot into the limelight in 2021 when it embarked on a spending spree aimed at sponsorships and partnerships with some of the world’s biggest brands. These included some widely publicized ads featuring stars such as actor Matt Damon and NBA star Lebron James. It also paid top dollar to sponsor major sports teams and tournaments, including paying over $700 million to rename the LA Lakers’ Staples Center, the largest naming rights deal in history.

At the time, it was easy for Crypto.com to cash in on these spurts as most digital assets hit new highs and trading volume increased, pushing the exchange into the top 5 globally. However, in May, LUNA and its sister token UST crashed, triggering a broader market collapse that has seen most tokens lose over 70% of their pre-May prices. Trading volumes have dried up for most exchanges, and Crypto.com has been hit harder than most.

An investigative report by AdAge reveals that Marszalek and his team have done everything they can to save their exchange, including quietly laying off thousands of employees and scaling back most of their sponsorship and partnership deals.

Crypto.com is a private company and is under no obligation to disclose its inner workings. However, current and former employees confirmed to the outlet that just over 2,000 employees were laid off, seven times higher than what Marszalek originally disclosed.

The first employees to receive the pink slip were in the marketing department. This included a full 10-member in-house creative team in North America that had been assembled just a few months earlier. The exchange had sourced its members from advertising agencies and marketing firms. The goal was to produce their ads in-house, which would be faster and cost less. Some of the employees on this team had worked at the exchange for less than four months, according to their LinkedIn.

In Bulgaria, Crypto.com operated an office mainly focused on customer service, housing thousands of employees. Sources reveal that around 1,200 employees from this office quit between June and August this year, a large majority due to layoffs.

“The most ambitious client I have ever worked with”

The ‘crypto winter’ has been hard on several exchanges in the digital asset sector. Coinbase (NASDAQ: COIN ) laid off 18% of workforce in June; Gemini’s “extreme cost-cutting” has seen it lay off hundreds of employees, as have Bitpanda, BitOasis and Banxa.

However, no major exchange has had to lay off a greater number of employees than Crypto.com. According to former employees and some of their partners, this is primarily due to Marszalek’s ‘overambitious’ expansion plans.

“I’ve worked with a lot of ambitious clients before, but Crypto.com is probably the most ambitious client I’ve ever worked with,” said an advertising executive who worked with the exchange in the past.

“They just wrote checks they could only cash when things were good,” commented one former employee.

Others compared the stock exchange’s expansion plan to the Internet companies that burst during the dot-com bubble. Crypto.com’s Super Bowl ads only confirmed these comparisons.

“Like Pets.com, you have these huge, killer Super Bowl commercials, but then it’s like, ‘So what?’ I think they were very confident in the markets and [thought] that if they just kept pushing harder, they could beat this cycle with volume, said Adam Jones, a director at New York-based digital design agency R/GA.

The spending spree is proving to be unsustainable as the stock exchange slips further down the ranking for traded volume. At its peak earlier this year, Crypto.com was in the top five along with Coinbase and Binance. Since then it has slipped further down, and as of October it is no longer on the Top 10 list.

See: BSV Global Blockchain Convention panel, The Future of Digital Asset Exchanges & Investment

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