Layoffs Hits Crypto Firms Despite Market Recovery, Here’s Why

Despite the recent market recovery, with Bitcoin continuing its ascent towards new all-time highs, the crypto industry is grappling with challenges, most notably job cuts. 

Earlier this week, prominent crypto firms Consensys and dYdX reduced their workforce by 20% and 35%, respectively. Recently, Kraken joined the list with a reduction of its workforce by 15%. 

Crypto Exchange Kraken Downsizes Workforce by 15%

American crypto exchange Kraken has reduced its workforce by 15%, making it the third major company in the space to do so this week. The layoffs affect about 400 of the company’s staff, approximately 2,600 employees.

According to the company, this move is aimed at increasing efficiency and simplifying management structures. They added that the development is meant to streamline operations and shift employee focus towards building rather than managing.

“We need to make sure our top contributors are focused on building rather than managing. To continue forging our path ahead and put Kraken in contention to become the largest crypto platform in the world, we need to be leaner and faster,” the company said. 

The layoff comes as the company appoints Arjun Sethi as co-CEO alongside David Ripley. Sethi is also co-founder and chairman of Tribe Capital and was previously part of the executive team at web pioneer Yahoo. 

Despite the cuts, the company is expanding with new products. Last week, Kraken announced plans to launch Ink, its own layer 2 blockchain. 

A Bad Week for Crypto Workforce 

With the surging Bitcoin price and bullish vibes across the industry, these layoffs by prominent crypto firms come as a surprise. Historically, layoffs are more likely during prolonged bear markets. When crypto prices are up, firms in the space tend to be fatter due to bigger profits.

The firms have different reasons for the layoff. Consensys, the first company to announce its decision this week, cited regulatory scrutiny and macroeconomic factors as reasons. The company has faced numerous legal battles with the United States Securities and Exchange Commission (SEC).

Later that day, decentralized exchange dYdX’s CEO Antonio Juliano said the firm had cut 35% of its staff. He hinted at the need for a new company direction.