Crypto exchanges reported to account for a number of layoffs
Crypto exchanges – The world watched as major tech industries like Amazon and Meta bid thousands of employees goodbye in a series of mass layoffs.
The trend continued into 2023, extending to the crypto space.
According to a CoinGecko report, January 2023 was the second worst month for crypto layoffs due to a wave of redundancies hitting the industry.
As a result, over 2,806 individuals lost their jobs.
The overall number of layoffs within the crypto industry last month might put the year on the right course to surpass 2022’s figure of nearly 7,000.
According to the research, the layoff course comes as the bear market and challenging global macroeconomic conditions continue to pressure companies.
Among the January figures, centralized crypto exchanges contributed to most of the cuts with 84% of all layoffs.
The researchers cited lower trading volumes and declining revenues as significant factors for the layoffs.
Some of the major crypto exchanges that announced mass layoffs in January include the following:
Coinbase and Crypto.com were among the companies to initiate layoffs early in 2022 (June, to be specific).
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Bobby Ong, the COO and co-founder of CoinGecko, said:
“During the bull market run, crypto exchanges expanded aggressively in response to the rapid growth in retail investor demand.”
“While crypto companies, in general, have been hit hard by the onset of crypto winter amid a tough macroeconomic environment, layoffs have revealed that exchanges, in particular, have been ‘swimming naked’ and can no longer sustain their previous excesses.”
In January, the crypto market recovered some of the losses they endured in 2022.
Meanwhile, Bitcoin gained nearly 40% value last month.
“It remains to be seen whether crypto exchanges will need to take any further cost-cutting measures,” said Ong.
However, June 2022 remains the month with the highest record of layoffs at crypto exchanges as 3,003 jobs were cut.
It was the first major crisis due to the collapse of the Terra ecosystem.
In the middle of the year, the crypto space endured the most challenging time as Terra’s UST stablecoin and the governance token LUNA collapsed.
LUNA has been part of the top ten when it fell 100% to a fraction of a fraction of a cent.
The collapse can be attributed to the mechanisms behind Terra and its stablecoin and general panic.
Upon hearing the stablecoin was dropping, many investors sought an exit.
Initially, the 20% rate was marked as stable, but it started to drop after Proposal 20 in March.
Proposal 20 means that if Anchor’s reserves increase by 5%, so would the interest rate.
However, if they decreased by 5%, the interest rate would also drop.
The crypto space faced more pressure in November when crypto exchange platform FTX collapsed.
The collapse led to a domino effect, which not only affected other crypto exchanges, but also cost 1,805 employees their jobs.
FTX also significantly affected companies that had exposure, including:
- Genesis Trading
- Galaxy Digital
- Voyager Digital
Many of the companies lost access to millions of dollars that were kept with the crypto exchange.
Investors were also locked out of their funds.
According to the CoinGecko report, centralized cryptocurrency exchanges accounted for 82.2% of the November layoffs in 2022.
Regardless, crypto job cuts are still matching a broader number in the tech sector as crypto accounted for 4.3% of all tech layoffs last year.
However, the number was slightly lower in January, standing at 4% of all tech layoffs.
The following sectors were hit hardest by mass layoffs:
- Consumer technology
- Food tech
Image source: Coin Telegraph