Crypto lending firm BlockFi today announced that it was cutting staff—making it the latest company in the digital asset space to give employees the chop amid a brutal bear market.
The firm said in a Monday statement that it was reducing its headcount by “roughly 20%.” BlockFi joins U.S. cryptocurrency exchanges Gemini, Coinbase, and Crypto.com in workforce cuts. A number of Latin American exchanges have also announced layoffs.
BlockFi, which offers its customers high-yield crypto accounts, said that it was “impacted by the dramatic shift in macroeconomic conditions worldwide.” It is likely referring to fears of a possible recession hitting markets hard just about everywhere around the globe.
Today, Wall Street’s S&P 500 dropped 20% below its January 3 record. Crypto is not exempt and is following the traditional markets, with Bitcoin and pretty much the entire digital asset space suffering. One of BlockFi's principal crypto-lending competitors, Celsius, yesterday cited market conditions when it announced it would halt withdrawals from its platform. The company's token, CEL, collapsed by 70% following the announcement.
BlockFi CEO Zac Prince took to Twitter yesterday to assuage his own clients: "All products and services continue to operate normally," he tweeted yesterday, in part. The company announced its own share of bad news today, however:
“We are reducing our headcount by roughly 20% and the reduction impacts every team at the company,” the firm’s statement today read. “This decision was driven by market conditions that have had a negative impact on our growth rate and a rigorous review of our strategic priorities.”
“We are doing everything in our power to treat all of our impacted colleagues with the empathy and compassion that they deserve,” it added.
Crypto got off to a rocky start this year, but right now, things are bad. Bitcoin, the biggest cryptocurrency by market cap, is down nearly 15% in the past 24 hours, trading for $23,734.62 a coin.
The rest of the market has been hit hard too: the combined market capitalization of all cryptocurrencies is now below $1 trillion at $980.65 billion—for the first time since February 2021.
This has led firms in the space to layoff staff as interest in cryptocurrencies appears to wane and investors sell risky assets like Bitcoin (and equities.)
BlockFi may be in an especially tight spot, considering the attention it has received from regulators. Earlier this year, the lender agreed to pay a $100 million settlement with the SEC and 32 states after it failed to properly register its high-yield Blockfi Interest Accounts.
BlockFi offers massive interest rates on crypto deposits, but deposits are not insured, which presents a certain degree of risk for its users.