BlockFi, a platform for trading and lending cryptocurrency, announced via a blog post on Monday that it’s laying off 20 percent of its 850 employees — around 170 to 200 people. CEO Zac Prince said in a Twitter thread that the layoffs can be traced to a “dramatic shift in macroeconomic conditions” and BlockFi’s push to become profitable.
It’s not the only crypto company letting workers go. On Friday, Crypto.com (the company with the Super Bowl ad featuring LeBron James) announced that it’s laying off around 260 workers, or around five percent of its workforce, according to a Twitter thread from its CEO, Kris Marszalek.
We will continue to evaluate how to best optimize our resources to position ourselves as the strongest builders during the down cycle to become the biggest winners during the next bull run.
— Kris | Crypto.com (@kris) June 11, 2022
The layoffs come as the crypto market is struggling as a whole. The value of Bitcoin and Ethereum have been falling throughout Monday morning, and Celsius, a lending platform, has halted withdrawals, citing “extreme market conditions.” (BlockFi has specifically said that it has “no exposure to Celsius” on Twitter.) Binance, a large crypto exchange, paused Bitcoin withdrawals for about three hours, citing a technical issue, and within the past few months, we’ve seen coins like Terra essentially go to zero.
Crypto firms have struggled to weather the storm. Coinbase announced that it was slowing hiring in May and reportedly rescinded over 300 job offers the next month; several other companies, like Gemini, Mercado Bitcoin, and Bitso have also had to lay off at least 10 percent of their workers within the past month.
BlockFi says in its post that the layoffs come after a period of explosive growth. The company says it had “about 150 employees” at the end of 2020 and has since grown to a headcount of “over 850.” After the layoffs, however, the company will be down to around 600 employees.
Similarly, Crypto.com was riding high just a few short months ago. In November 2021, it reportedly paid $700 million to plaster its name onto a sports arena in Los Angeles, which was formerly known as the Staples Center. “In the next few years, people will look back at this moment as the moment when crypto crossed the chasm into the mainstream,” Marszalek told the Los Angeles Times when the naming deal, which is supposed to last for 20 years, was announced.
It’s easy to see why crypto companies have been hiring; the space has exploded during the pandemic with prices for major coins rocketing up, NFTs exploding onto the scene, and celebrities and companies alike hyping the blockchain. But, as 2022 has worn on and interest rates have gone up, the growth has started to reverse; trillions of dollars in value have been wiped out from the crypto market, NFT sales have slumped, and companies, including BlockFi, have run into trouble with regulators as governments try to figure out how to handle crypto. Not everyone who bought the boom has made it, and many in the space are predicting a “crypto winter.”
Both BlockFi and Cypto.com cite macroeconomic conditions or the overall bear market that’s seen stock prices as a whole drop. And indeed, they’re not the only firms struggling; other tech and finance-related companies like Klarna, Netflix, Tesla, Cameo, and Better.com have announced sizable layoffs as well, and we’ve seen companies like Meta start to slow down on hiring. At the end of the day, though, those other companies have a draw beyond just a number on a chart: people still need entertainment or transportation. Most consumers have been drawn to crypto firms solely because they thought they could make money; if that perception shifts, the business model could become more difficult to keep afloat.