HomeBusinessBlockFi cuts 20% of its staff as bitcoin plunges

BlockFi cuts 20% of its staff as bitcoin plunges

The logo of the BlockFi cryptocurrency platform.

Budrul Chukrout | SOPA Images | Light Rocket via Getty Images

Crypto lender BlockFi is cutting around 20% of its staff as the company reckon with a dramatic slowdown in digital currencies and heightened concerns about a weakening economy.

CEO Zac Prince said in a tweet on Monday that BlockFi was impacted by the “dramatic change in macroeconomic conditions”, which had a “negative impact” on growth.

Backed by venture capitalist Peter Thiel, BlockFi has grown dramatically in recent years, benefiting from low borrowing costs and soaring crypto prices. Before the latest cuts, the company went from 150 employees at the end of 2020 to more than 850.

BlockFi, which offers a popular savings product that allows customers to earn interest on their digital currency holdings, has raised more than $957 million since its launch in 2017 and was targeting a valuation of nearly $5 billion. Last year. However, industry publication The Block reported last week that the company was in the process of raising a downside round at a valuation of around $1 billion.

Crypto businesses across the board are looking for ways to cut costs, as investors turn away from riskier assets, reducing trading volumes. Bitcoin is down nearly half this year after plunging 15% on Monday, while Ethereum has lost two-thirds of its value in 2022, dropping 16% at the start of the week. The crypto market has fallen below $1 trillion from $3 trillion at its peak in November 2021.

Crypto.com recently announced a staff reduction of 260 people, as did Gemini, which said it would lay off 10% of its workforce – a first for the US-based cryptocurrency exchange and custodian. Meanwhile, Coinbase has extended its hiring hiatus for the “foreseeable future” and plans to rescind some job openings.

Celsius, another crypto lender, has just suspended all withdrawals and transfers between accounts, given “extreme market conditions”. Celsius has lent over $8 billion to its clients, making it one of the biggest players in the crypto lending space.

BlockFi publicly distanced itself from Celsius in a tweet on Monday, announcing that it “has no exposure to Celsius” and had “never worked with them as a partner”.

Prince said BlockFi’s primary goal is “to achieve profitability” and that the company is “here for the long haul.”

In addition to job cuts, the platform is also cutting marketing spend, eliminating uncritical vendors, cutting executive compensation and slowing headcount growth, according to a blog post by co-founders Prince and Flori Marquez.

Prince said customers would not be affected by the cuts.

“Customers will experience no material change in the quality of service they have come to expect, their funds are protected, and all platforms and products continue to operate as normal,” Prince tweeted.

While this may reassure people who have entrusted their money to the company, BlockFi is under increased scrutiny from regulators.

In February, the company agreed to pay a $50 million penalty to the U.S. Securities and Exchange Commission, as well as additional fines of $50 million to 32 states to settle similar charges related to its crypto accounts. popular bearing interest.

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