Prominent Exchange and Token Issuer Crypto.com Slashing 20 Percent of Workforce

Representations of virtual cryptocurrencies are placed on U.S. dollar banknotes in this illustration taken on Nov. 28, 2021. (Dado Ruvic/Reuters)

Crypto.com will be laying off about a fifth of its workforce in a second round of layoffs within six months, citing industry-wide issues, including FTX bankruptcy, in what looks like a trying period for the once-booming sector.

Although the company “grew ambitiously at the start of 2022,” the “trajectory changed rapidly with a confluence of negative economic developments,” said Kris Marszalek, chief executive of the Singapore-based crypto-exchange. “The reductions we made last July positioned us to weather the macroeconomic downturn, but it did not account for the recent collapse of FTX, which significantly damaged trust in the industry.”

According to the CEO, the company serves “more than 70 million users worldwide” and maintains “a strong balance sheet.” However, recent “unforeseeable” developments within the cryptocurrency sector has forced it to “make additional reductions” in the workforce.

Launched in 2016, the company employs around 4,000 people, although the number has not been verified, and the company has been letting go of workers since mid-2022. The issues with FTX started surfacing around November, but a series of crypto collapses were happening since May 2022.

The company has a crypto app, sells Visa cards, deals with non-fungible tokens (NFTs), and features an exchange and wallet, along with a coin token, Cronos. Based on social media, crypto.com has locations across Europe and Asia, with a base in Miami, Florida. Exchanges typically earn a fee for transactions done on the platform, but with low volumes in the sector, dampened by reduced token prices, the business viability of crypto exchanges has been shaken.

Earlier Mishaps

Last year, users of Crypto.com pulled out funds following the mishandling of a $400 million transaction. CEO Marszalek admitted the mistake and said that the currency transfer was sent to a wrong account type on another exchange.

“The ETH [Ethereum] transfers that generated so much FUD [fear, uncertainty, doubt] & speculation on Twitter today were made over three weeks ago, on October 21st to http://Crypto.com’s whitelisted corporate account at http://Gate.io,” stated Marszalek in a tweet on Nov. 13.

“Crypto.com proceeded to withdraw the funds back to its cold wallets over the following days. The entirety of ETH was successfully withdrawn by http://Crypto.com and returned to our cold storage,” he added. “That’s all there is to it. All our systems are operating normally.”

However, Twitter users, who first commented on the wrong transfer based on publicly available blockchain transaction records, were not entirely satisfied with how the events turned out, especially with the FTX debacle.

Richard Lawler, news editor for the Verge, said in a response tweet, “Normal being, the status where they occasionally send $400 million to the wrong place, that’s normal?”

Binance chief executive Changpeng Zhao said at the time in a tweet, which has since been deleted, “If an exchange [has] to move large amounts of crypto before or after they demonstrate their wallet addresses, it is a clear sign of problems.”

Since peaking in November, Cronos has since fallen more than 93 percent, and is currently trading at $0.0680 as of 11:47 a.m., Nov. 13, EST.

The Epoch Times has reached out to the exchange.

Not Just Crypto.com

Coinbase, another prominent crypto exchange platform, announced laying off nearly 20 percent of its workforce, around 950 positions for the quarter ending in March.

The company had already cut down 18 percent of its workforce last June, with the latest rounds expected to reduce expenses of $149–163 million for the first quarter of 2023, according to chief executive Brian Armstrong.

Armstrong blamed “unscrupulous actors in the industry,” pointing to FTX as one of the reasons for the decline in the sector. However, he added that FTX collapse could “end up benefiting Coinbase” because a competitor is ultimately out of the picture.

Crypto-focused bank Silvergate said, earlier in January, that it would be cutting off 40 percent of its workforce.

Besides the layoffs, there are other issues plaguing the industry with increased regulations.

The U.S. Securities and Exchange Commission (SEC) filed a lawsuit late Tuesday against Gemini exchange and crypto lender Genesis Global Capital for allegedly selling unregistered securities.

“Defendants offered and sold the Gemini Earn Agreements through the Gemini Earn Program without registering” with securities regulators, according to the complaint. “As a result, investors lacked material information about the Gemini Earn program that would have been relevant to their investment decisions.”

Gemini co-founder Tyler Winklevoss responded in a tweet that the suit was a “manufactured parking ticket.”