Crypto.com, one of the largest exchanges, is currently suffering from some of the effects, and has been forced to cut 20% of their staff. The crypto winter has been relentless, with the bear market now having extended for longer than many anticipated, and longer than any other previous Bitcoin bear market – many anticipated that the pattern of this bear market would be similar to previous years, which have traditionally lasted one year.
However, it seems that this bear market is longer and deeper than bear markets of the past, and may be far more drawn out. Many exchanges have been dealt blows as of late, and it seems that there is still more to come.
Crypto.com cuts 20% of their staff
In the bull market of 2021 Crypto.com was able to establish itself as one of the most dominant exchanges in the entire industry, thanks to their extremely aggressive marketing campaign which saw the company take out large and expensive ads at events such as the Super Bowl in the US. The company even bought the rights for the Staples Centre arena, which has since been rebranded as the Crypto.com arena.
However, Crypto.com has recently announced that, given the prevailing market conditions, they are being forced to significantly cut their workforce, and are to be laying off 20% of their staff.
According to Kris Marselek, co-founder and CEO of Crypto.com:
“We grew ambitiously at the start of 2022, building on our incredible momentum and aligning with the trajectory of the broader industry. That trajectory changed rapidly with a confluence of negative economic developments.”
As with many companies during the bull market, it appears that they were growing too quickly and became mired in hubris before the reality of the bear market set in.
The effects of FTX implosion rippled throughout the industry
The effects of the FTX implosion have been catastrophic for many in the crypto space, and the collateral damage that the implosion caused has been a disaster for the majority of players in the industry.
As such, there has been a general liquidity crunch in the market, which has dramatically impacted the ability of many companies to hire in the space, since access to capital has become harder to come by.
This hasn’t just been financial capital (which has been doubly hit by rising interest rates), but also intellectual capital – the damaged reputation of the entire cryptocurrency industry post FTX has meant that fewer people are willing to work in the industry moving forward.
Exchanges like Huobi and Coinbase have also announced large layoffs
Crypto.com isn’t the only exchange that has been suffering of late, with Huobi and Coinbase also having a very difficult time and struggling to maintain a lot of their workforce.
Last week, Huobi began experiencing a bank run after struggling to pay several of their top employees, which gave way to a wave of uncertainty that the exchange may in fact be insolvent.
Coinbase have also been struggling, and the CEO Brian Armstrong, despite being renowned for taking a more cautious approach to the markets than some of his peers (as demonstrated by the Coinbase’s longevity thus far)
The SEC have announced that they have charged Gemini and Genesis
In addition to the volatility that the industry has come to terms with after a string of billion dollar bankruptcies, the SEC has now announced that they have charged Gemini and Genesis for offering unregistered securities offerings via the Gemini Earn programme.
We @SECGov charged Genesis & Gemini for the unregistered offer & sale of crypto asset securities through Gemini Earn.
Crypto intermediaries need to comply with our securities laws. This protects investors. It promotes trust in markets. It’s not optional. It’s the law.
— Gary Gensler (@GaryGensler) January 12, 2023
Some have welcomed this move, and have cheered on the SEC for finally regulating the industry, but others have complained that this is too little too late and that the bulk of the damage done by these unregulated lending companies had already been done.
Although there have been some tentative signs that the markets may be recovering, it is clear that 2022 was an awful year for the majority of cryptocurrency companies (especially when compared with 2021), and they certainly aren’t out of the woods just yet.
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