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Layoffs Spike Amid Crypto Winter

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CNN Business

Hao Jia was so convinced of the potential of cryptocurrencies that he passed up a job at a major tech company, Oracle, to accept another offer he received in early April to become a software engineer at one of the crypto startups. the most popular, Coinbase.

But last week, Jia was one of many employees to receive an email from Coinbase canceling their job offers. For Jia, that meant not only losing a job, but also, possibly, a visa.

“I’m an international student and I need to keep my visa,” he told CNN Business. “Now, after Coinbase, I prefer to go to a bigger company because I’m worried about my visa.”

After initially planning to hire up to 2,000 additional employees this year, citing “huge product opportunities ahead,” Coinbase abruptly changed course. In recent days, the cryptocurrency exchange, which was once valued at nearly $100 billion, rescinded offers, implemented a hiring freeze and laid off 18% of its workforce.

In a company-wide email sent to employees on Tuesday announcing the massive layoff, Coinbase CEO Brian Armstrong pointed to a possible impending recession and growth that has happened “too much.” rapidly”. Employees learned that they had lost their jobs after being deprived of their work emails. I realize the removal of access will be sudden and unexpected, and this is not the experience I wanted for you,” Armstrong wrote.

The sudden reversal in hiring at Coinbase reflects a broader trend in the crypto sector. A growing number of startups are cutting staff in order to survive a possible prolonged downturn in the crypto market and the economy in general, creating a sense of a boost in the process among the many workers who have joined these companies with the belief that crypto was the next big thing.

In a tweet saturday, CEO Kris Marszalek announced that the Singapore-based exchange would lay off about 260 workers, or 5% of its workforce. Another major exchange, Gemini Exchange, announced last week that it would lay off 10% of its employees. And Crypto Lending Platform BlockFi said it cuts about 20% of its workforce.

In public statements, the companies presented the cuts as necessary measures to deal with changing economic conditions, amid concerns about rising interest rates and inflation. US stocks have plunged into a bear market this week. Recession fears are growing inside and outside the industry. And cryptocurrencies, once seen as a hedge against the stock market and inflation, also plunged, with Bitcoin falling to just over $20,000 on Wednesday from an all-time high of nearly $20,000. $69,000 in November.

“We appear to be entering a recession after an economic boom of more than 10 years,” Armstrong wrote in his email to Coinbase staff. “A recession could lead to another crypto winter and could last for an extended period.”

In some cases, however, crypto executives are still trying to double down on their belief in the long-term potential of the market. As many crypto enthusiasts will point out, there have been notable declines over the years, including Bitcoin’s crash in 2018 and a drop in May 2021 that wiped out $1 trillion in market value in a week. . Some industry executives point out that crypto is still bouncing back.

“Constraint is the mother of innovation and tough times are a function forcing focus,” Cameron and Tyler Winklevoss, the founders of Gemini, wrote to staffers. “The crypto revolution is well underway and its impact will continue to be profound. But its trajectory has been anything but gradual or predictable. »

For many workers, the sudden cuts were shocking and cast doubt on the future of the industry.

Hiring in the crypto industry doubled between November and April, with two of the top three employers being Gemini and Coinbase, according to data from ManpowerGroup, a global staffing firm. Crypto companies raised $34 billion in funding globally in 2021, an eightfold increase from the previous year, according to data from consultancy PwC. Many employees who were drawn to an industry that until recently felt like a rocket ship are now wondering if and when the good times will return.

“I was really, really happy when I got the job, and now it’s kind of like I’m mourning the loss,” said a recent grad whose job offer was rescinded by Coinbase and who spoke on condition of anonymity because he feared repercussions. to their career. Another Almost Coinbase employee who just graduated from college said, “My heart sank.”

Tyler Winklevoss (L) and Cameron Winklevoss, founders of crypto exchange Gemini Trust Co., attend the Bitcoin Convention 2021 cryptocurrency conference at the Mana Convention Center in Miami, Florida on June 4, 2021.

While some of these recently laid-off workers include engineers who might be in demand at other companies, they nonetheless face the prospect of scrambling to find new jobs at a difficult time for the tech sector. At a time when American companies overall are laying off fewer workers, tech and fintech companies have been hit by a wave of job cuts. Tech companies laid off more than 4,000 people in May, up 781% from total cuts from January to April, according to a report by Challenger, Gray and Christmas. Fintech companies, meanwhile, saw a 268% increase in job cuts, according to the report.

The fallout for workers also extends to crypto startups in other countries. At Bitso, one of the largest exchanges in Mexico with over four million users across Latin America, 80 employees were made redundant at the end of May in response to falling markets. According to employees, many of the affected workers were recent hires.

Leaders ‘are afraid of losing money, and I completely understand that, but it shouldn’t be okay to hire someone and fire them 40 days later,’ said laid-off employee Murillo Bargas from Bitso, to CNN Business. “They should have seen this coming. Crypto winter is not news to anyone.

“I was in a room with an employee who was hired a week ago, so he just did the onboarding things, and then the next week he was fired,” said Lucas Ferreira, a former employee. from Bitso, to CNN Business.

“Our workforce decisions are made in the long-term best interests of our business to best support our customers and our strategy as a business,” a Bitso spokesperson told CNN. Business.

Coinbase CEO and Co-Founder Brian Armstrong speaks at the Milken Institute Global Conference on May 2, 2022 in Beverly Hills, California.

A notable exception to the layoff trend is Binance. Binance announced 2,000 open positions on Wednesday in a tweet from CEO Changpeng Zhao, who appeared to be interested in the spending of other crypto startups like Coinbase and “It wasn’t easy saying no to Super Bowl ads, stadium naming rights, big sponsor deals a few months ago, but we did it,” Zhao wrote in the ad.

“We come into this crypto winter in a position of strength, and there’s really no way we’ll ever come out of the crypto winter in a weaker position,” said Brian Shroder, CEO of Binance’s US arm. at CNN Business last week, ahead of the hiring announcement. “In the past three days alone, we’ve interviewed six people from Coinbase and Gemini.”

As for when the crypto winter may end, anyone can guess. “That’s the beautiful thing about crypto: it literally ends next week, or we could be in it for over a year,” Shroder said.

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