- Events in 2022 exposed how intertwined stakeholders have become in the crypto industry.
- Large crypto firms are taking drastic measures in the pursuit of survival.
The challenge around stablecoins that started in 2022 is extending its influence into 2023. The consequences of this development are whipping up more bankruptcies, with several companies subscribing to drastic adjustments that could lead to massive layoffs.
The crash of TerraUSD in the spring of 2022 exposed several malpractices in the crypto industry, revealing how intertwined most stakeholders have become. It initiated a ripple effect that is still unfolding with increasing casualties.
Many of the biggest crypto lenders in the sector have gone underground due to a loss of confidence from customers that have withdrawn their funds. There is also increasing scrutiny from the regulatory authorities, making it more difficult for most crypto companies to run their businesses as usual. Hence, many are embarking on structural adjustments to aid their survival.
One of the top crypto companies that have kickstarted an adjustment program is Blockchain .com, which announced plans to lay off 28% of its workforce. That is equivalent to 110 employees after the company fired 150 workers last summer. It also said it would close its offices in Argentina.
Coinbase, the largest crypto exchange in the U.S. has also laid out plans to sack 950 workers, making up 20% of its workforce. The company also plans to embark on unspecified cost-cutting processes as part of a restructuring plan.
This wouldn’t be the first time Coinbase is laying off staff since the stablecoins crisis began. It let some of its staff go in the summer of 2022.
Crypto. com, like Coinbase, also plans to cut its staff strength by 20%. It will be the second layoff campaign of the company in six months. According to reports, the last layoff exercise did not come with prior notice. Staff members only realized that they no longer work with the firm after they could not connect to staff meetings.
Last year’s crypto industry crisis reached its pinnacle when FTX collapsed, taking many investors by surprise. It led to massive withdrawals from centralized exchanges, the impact of which they are beginning to feel in the new year.