Blockchain.com lays off 25% of its workforce due to crypto market downturn

by Arthur · July 21, 2022

Cryptocurrency exchange Blockchain.com Inc. is laying off 25% of its employees, 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 January staffing levels. This will reduce the number of employees at the company by around 150.

The company said it will close its Argentina offices as part of the pullback and end its planned team expansions in several countries as well. As a result, almost half of the affected employees are in Argentina, another 26% are in the US and 16% are in the UK

It will also halt current business operations related to mergers and acquisitions and pause efforts to expand gaming and slow down the non-fungible token marketplace, the company said. Executive salaries and senior management salaries are also reduced.

The exchange is among a number of crypto firms that lent money to the now insolvent crypto hedge fund Three Arrows Capital. 3AC filed for bankruptcy protection in the US following liquidation proceedings in the British Virgin Islands, and now the founders have reportedly disappeared.

Blockchain.com loaned $270 million in cryptocurrency and US 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 the fallout collectively affected a number of crypto lending firms. Both Celsius and Voyager Digital loaned large amounts to 3AC, then suspended withdrawals of customer funds, and then filed for bankruptcy protection after 3AC defaulted on those loans.

All of this was triggered by a downturn in crypto markets that began with an initial fall that was compounded by the collapse 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 rallied above $22,500. In comparison, this is still a 28% drop from its high of $31,500 near the beginning of June, and a steeper drop from its all-time high of over $68,000 in November. The broader cryptocurrency markets also suffered similar declines during the same period.

These poor market conditions have led many crypto companies to announce cutbacks. They include cryptocurrency exchange giants like Coinbase, which laid off 18% of its staff, or 1,100 employees; the Winklevoss-led Gemini exchange, which cut staff by 10%; Crypto.com, which cut 5% of its workforce; and the largest NFT marketplace OpenSea, which reduced its staff by 20%.