Because of the tough crypto market conditions, many companies are forced to lay off. Recently, one of the major cryptocurrency exchanges, ShapeShift has announced to lay off around 37% of its workforce.
Also Read: HitBTC has Frozen Users’ Accounts
In a blog post, the founder and Chief Executive Officer (CEO) of ShapeShift, Erik Voorhees said that the company has laid off 37 employees which are around one-third of its workforce. He said the crypto winter had left the exchange with no other viable option but to adjust with adverse market conditions.
“a deep and painful reduction, mirrored across many crypto companies in this latest bear market cycle.”
According to Voorhees, ShapeShift is not the only crypto company to take such a step, other crypto companies are also trimming their workforce. In early December ConsenSys, the Ethereum production studio also announced 13% lay off. More recently, Bitcoin mining giant Bitmain and chat startup Status have also announced that they are reducing their staff to cut the costs in crypto winter.
Because of the bull market of 2017, crypto companies such as ConsenSys, Bitmain, ShapeShift, and other crypto startups aggressively expanded their services. During this phase, cryptocurrency exchange ShapeShift recorded a massive growth rate of over 3,000% as the valuation of virtual assets crossed the $800 billion mark. At that time, crypto exchanges were seeing record volume and crypto companies were receiving venture capital from prominent investors. Voorhees said that,
“We ride high and fast during the ascents, growing at rates unseen almost anywhere else in the business world (ShapeShift grew 3,000% in 2017). And when the markets turn, the crypto recession is similarly dramatic and severe.”
During the correction phase, most of the crypto assets lost 70-80% from their all-time highs. Because of the crypto downturn, fewer venture capitalists are investing in the crypto market, the revenue is declining, and there is also a significant decline in crypto trading activities.
According to Voorhees, there are many things which worked against ShapeShift and forced the company to take the decision of lay off. Other than mounting legal concerns which have impeded the entire crypto industry, the company grew too fast and introduced many product areas such as KeepKey, and CoinCap. Know Your Customer (KYC) policies which the exchange has followed, also lead to a significant customer loss. And moreover, crypto transactions are also dropping which is leading to a drop in revenue.
Voorhees further added, though the company had hedged for such risks, it is not enough to allow the crypto exchange to remain at its current workforce level. Voorhees believes 2018 was a rough year for the entire crypto industry and the industry is hopeful for 2019.