“I’ve worked with a lot of ambitious clients before, but Crypto.com is probably the most ambitious client I’ve ever worked with,” said an advertising executive who has worked with the company in the past.
However, when a downturn in the crypto market began in late spring, virtually all crypto exchanges were forced to cope with less trading activity and lower trading volume. Crypto.com was particularly hard hit; in terms of monthly spot trading volume, the firm had consistently ranked as a top-five crypto exchange as recently as March of this year, per data from CoinGecko and The Block. By late summer it had fallen out of the top 10.
Underlying Crypto.com’s expensive marketing decisions was a strategy that seemed more concerned with making headlines than building a sustainable business, according to former and current company employees. In fact, the firm’s “get big fast” approach is reminiscent of the many Internet startups that shelled out staggering sums in marketing in the early aughts, only to fail when the dot-com bubble burst.
“They just wrote checks they could only cash when things were good,” said one former employee. “Fun money.”
Silent cuts
Sponsorship deals that Crypto.com has quietly reduced include: a sponsorship with Angel City FC, which has seen significant reductions in the amount of money that was meant to be allocated to efforts including Web3 education and NFTs, another former employee said. Lawyers for the Los Angeles-based women’s soccer club wrote to Crypto.com alleging the firm withheld payments and reneged on the deal, according to materials reviewed by Ad Age.
“While it is our policy to keep our points of agreement confidential, I can share that we enjoy our partnership and look forward to continuing to work on and off the field to make an impact, including the continuation of our powerful financial literacy program,” wrote an Angel City FC spokesman over email.
In another highly publicized deal, Crypto.com became the global crypto partner of Twitch Rivals, Twitch’s esports league, but Crypto.com management decided in late spring that it wanted to dissolve the deal, according to internal communications reviewed by Ad Age. Both companies have since agreed to end the partnership by the end of 2022, a separate source with knowledge of the deal said. A Twitch spokesperson declined to comment for this story.
Other details of Crypto.com’s partnership cuts recently emerged when SportBusiness reported that the company pulled out of a five-year sponsorship of the UEFA Champions League, the most prestigious soccer tournament in Europe. The deal was apparently closed due to regulatory concerns in France, Italy and the UK. Crypto.com has separate partnerships with the French football club Paris Saint-Germain, the Italian football league Serie A and the English-owned Aston Martin Formula 1 team.
The 2022 FIFA World Cup is Crypto.com’s soccer partner, but the firm has quietly cut the number of hospitality packages it plans to issue to institutional clients, the second former employee said. Those orders may have been reduced by as much as half, the first former employee said. Hospitality packages, which include offers on tickets, hotels and other benefits, are usually a primary commitment for sponsors to support the tournament’s operations.
Read: Crypto.com is sponsoring the 2022 World Cup
NFT drops – a core offering hyped in many of Crypto.com’s sponsorship deals – have also dried up in recent months. In the four months since the layoffs began, the company has released just two official collections for all of its combined sports partnerships — compared to nine in the previous four months. Naturally, the slowdown in the larger NFT market has dampened demand for the tokens, but whether Crypto.com plans to hold back most of the drops until crypto winter abates — a day that could be years away — remains unclear.
In response to each of the claims mentioned above, a Crypto.com spokesperson wrote that they are “factually incorrect” but declined to provide further details.
Meanwhile, Crypto.com has scaled back efforts to attract new users to some of its additional products, such as Visa debit cards and stakes, which allow crypto investors to earn returns on their coins. The Visa card has seen reductions in merchant discounts and cashback rates, while stake rewards for Crypto.com’s native blockchain token, CRO, have been cut by 20%.
“We have no comment [on the Visa cards]everything related to our incentives is published for both existing and new customers to see,” a Crypto.com spokesperson wrote in an email.
Read: How brands and agencies are responding to the NFT market downturn
Brand New Marketing Team “Dismantled Immediately”
As layoffs followed, one of the Crypto.com teams targeted was a new brand creative studio, a group of at least 10 North American employees recently poached from ad agencies and other advertising companies, according to several former employees.
The team was “dismantled immediately,” the second former employee said. Several of these team members were with the company for just four months, according to their LinkedIn profiles. The vice president of the group was the only member not laid off along with the rest, but they have since left the company as well.
The creative branding studio would help lead a shift away from Crypto.com having to rely on outside agencies to create its ads, sources said. Previous agencies the company worked with include Pereira O’Dell and Wieden+Kennedy. Crypto.com wanted to improve its ability to launch campaigns on short notice, as demonstrated by its Oscar ad – a national TV spot themed around the war in Ukraine, which launched barely a month after the start of the invasion.
Read: Crypto.com’s Oscar ad is a sobering plea for Ukraine
Other cuts in North American marketing staff included a creative director, a director of content partnerships, several members of a team responsible for sponsorships and the head of influencer marketing.
Meanwhile, global cuts were made in departments across the company. At an office in Bulgaria that focused mainly on customer service, about 1,100 to 1,200 employees quit between June and August, according to several former and current employees. These departures—the vast majority of which were layoffs—combined with others from around the world add up to a rough total of just over 2,000 company-wide departures, or between 30% and 40% of Crypto.com’s pre-summer workforce, several times over. former and current employees said.
Before the cuts, the firm had more than 5,000 employees, several current employees confirmed. About 45% of those employees were hired between 2020 and 2022, according to TheStreet. As of press time, the search result for Crypto.com’s career page still states that the company has over 4,000 employees.
Former and current employees confirmed that internal directories were removed and Slack channels were deleted, making it difficult for anyone—Slack or not—to fully understand the extent of cutbacks.
What happens afterwards?
The irony is not lost that Crypto.com, by virtue of its suffix, is connected to a subset of online companies that exploded dramatically 20 years ago (Pets.com, Boo.com, etc.) in what became known as ” dot-com bubble.” The rise of crypto firms as a whole shares similarities with early dot-coms, including the reliance on a new technological framework, huge flows of venture capital investment and massive marketing splashes that culminated in Super Bowl ads.
“Like Pets.com, you have these massive, killer Super Bowl commercials, but then it’s like, ‘So what?'” said Adam Jones, managing director of technology at R/GA.
When early dot-com startups began to fail, marketing was usually the first area to undergo major cuts, along with slashes in headcount that often negated recent hiring waves. In many cases, complete shutdowns occurred not too long after.
Read: Dot-com Super Bowl ads are a warning to crypto brands
It is far too early to predict Crypto.com’s fate, but the firm has already underperformed many of its competitors. Coinbase and FTX, which both debuted ads in this year’s Super Bowl, remain in the top five of crypto exchanges by monthly spot trading; Crypto.com – previously third – is now in 11th place, as of August 2022 data.
This difference is also reflected in the extent of redundancies. Coinbase, a public company, announced 18% cuts, and FTX, which has a relatively lean headcount of 300 employees, has yet to announce a cut.
The reasons for Crypto.com’s particularly steep decline in trading are myriad, but its huge marketing spend exacerbated the problems, according to Jones.
“I think that they were very confident in the markets and [thought] that if they just kept pushing harder, they could beat this cycle with volume,” he said. R/GA does not work with Crypto.com, Coinbase or FTX.
What happens next for crypto companies will largely be a result of macroeconomic conditions, whether volatility among crypto firms can be contained and the duration of the crypto winter. These forces have been the main source of headwinds across the industry.
Yet Crypto.com also struggles with its own costly decisions. Fortune may favor the brave, but valor has its limit.
