Dapper Labs, Galaxy Digital, Crypto.Com Among companies looking to downsize
Of CNBCTV18.com IST (published)
The crypto market is experiencing one of its longest, most bitter winters in recent history. It has caused a massive decline in the valuation of digital assets and a significant reduction in overall trading volume. This has put a lot of pressure on crypto firms, many of which are turning to cutbacks to save costs and stay afloat. Here is a roundup of some of the top crypto platforms that have announced layoffs in recent times.
The latest firm to join the crypto job loss bandwagon is Dapper Labs. Founder and CEO of the firm, Roham Gharegozlou, announced on Wednesday that the firm had reduced its workforce by more than 20 percent. Gharegozlou pinned the layoffs on the current “market environment” and said the reductions were the “last” thing they wanted to do, but they were “necessary.”
The NFT market has been in tatters lately. Sales numbers have fallen for six straight months, even falling below the $500 million mark in October for the first time since July 2021. The downturn has had a negative effect on Dapper Labs, with its signature NFT collection, NBA Top Shot , which hits a two-year monthly sales low.
According to the managing director, the company also grew too quickly, going from 100 employees to 600 in less than two years. With today’s market conditions, however, it became difficult to maintain operations on a large scale, which forced the firm to take serious measures.
“I take responsibility for it,” Gharegozlou said, while also announcing three months’ severance pay, resume and career coaching, a public talent directory and alumni support for the departing team members.
Besides Dapper Labs, Galaxy Digital also plans to cut its workforce by 20 percent, according to sources. The crypto-focused financial services firm has lost 70 percent of its share value this year. The company also reported a loss of $554 million in the second quarter of 2022. Combined, these two factors may be the reason why Galaxy is looking to scale back. In addition, the firm is also fighting a lawsuit with BitGo. The crypto depository platform claims that Galaxy Digital breached a merger agreement after closing a deal to buy BitGo for $1.2 billion.
Another firm that has declined sharply in recent months is Crypto.com. According to an AdAge report from October 6, the crypto exchange has let go of nearly 2,000 employees since last summer. This corresponds to almost 40 percent of the workforce. The stock exchange has also cut back on its marketing and promotional expenses. For example, it has pulled out of its $495 million sponsorship deal with the Champions League, which is Europe’s elite soccer tournament.
The company has also rolled back sponsorship deals with Los Angeles-based soccer team Angel FC and streaming service Twitch. The firm still plans to be an official sponsor of the 2022 FIFA World Cup. However, it has cut back on some of the hospitality packages and other benefits it must provide to help facilitate the tournament’s operations.
Furthermore, the payment processing company Stripe also wants to let go of 1,000 of its employees in the coming weeks, which corresponds to 14 percent of employees. The company has been doing quite well recently, leading the wave of crypto adoption among payment processing firms. Stripe already allows users to make payments in the USDC stablecoin and is also partnering with OpenNode to facilitate fiat-to-bitcoin payments.
However, macroeconomic factors, including inflation, escalating energy costs, higher interest rates and spiraling cryptocurrency values, have pushed the firm to take extreme measures. Stripe CEO Patrick Collison said the company needed to “reduce costs” and the decision to downsize would help the firm “adapt” to future demands.
These firms are not the first to let go of employees this year, and if the current market scenario persists, they certainly won’t be the last. According to a study by Moneyweb, crypto companies have cut more than 5,000 jobs since April alone. The industry has also seen several high-profile exits in recent months, all pointing to the bitter winter the market is now facing.
However, crypto markets are cyclical and the hope is that when prices pick up again, leading crypto firms will go into overdrive trying to recruit the right talent. Until then, all we can do is wait and watch.
