The cryptocurrency exchange Blockchain.com Inc. is laying off 25% of its staff, citing poor market conditions and the need to cut expenses after financial losses.
The news was first reported today by CoinDesk, which noted that it will bring the company back to its staffing levels in January. This will reduce the number of employees at the firm by about 150.
The company said that it will close its Argentina offices as part of its pullback and end its planned team expansions in several countries as well. As a result, almost half of the affected employees are in Argentina, a further 26% are in the U.S. and 16% are in the U.K.
It will also halt its current business operations related to mergers and acquisitions and place a pause on efforts to expand gaming and slow its nonfungible token marketplace, the company said. Executive salaries and chief executive compensation are also being reduced.
The exchange is among a number of crypto firms that loaned money to the now insolvent crypto hedge fund Three Arrows Capital. 3AC filed for bankruptcy protection in the U.S. after liquidation proceedings in the British Virgin Islands and now the founders have allegedly gone missing.
Blockchain.com lended $270 million in cryptocurrency and U.S. dollars to 3AC and fully expects to lose the entire amount.
The collapse of 3AC had a significant impact on both markets and the industry as a whole as its fallout collectively affected numerous crypto lending firms. Both Celsius and Voyager Digital loaned large amounts to 3AC, subsequently suspended withdrawals for customer funds, and then filed for bankruptcy protection after 3AC defaulted on those loans.
All of this was triggered by a downturn in the crypto markets beginning with an initial drop that was exacerbated by the breakdown of the TerraUSD “algorithmic” stablecoin and its sister cryptocurrency Luna, which lost 99% of its value in May.
Crypto markets fell into what has been dubbed “crypto winter,” bringing bitcoin below $17,947 in mid-June. It has only recently recovered to over $22,500. For comparison, this is still a 28% drop from a high of $31,500 near the beginning of June, and a steeper drop from the all-time high of over $68,000 in November. The broader cryptocurrency markets suffered similar downturns during the same period as well.
These poor market conditions have led to numerous crypto companies announcing staff cuts. They include cryptocurrency exchange giants such as Coinbase, which laid off 18% of its staff, or 1,100 employees; the Winklevoss-led exchange Gemini, which cut its staff by 10%; Crypto.com, which cut 5% of its workforce; and the largest NFT marketplace OpenSea, which reduced its staff by 20%.