Cryptocurrency exchange and custodian service Gemini, which is based in the United States is going to lay off about 10% of its workforce. On Thursday morning, owners of the exchange twin billionaires Tyler and Cameron Winklevoss made the announcement via a blog post. They said that the crypto industry was going through a ‘contraction phase’, which is commonly referred to as the ‘crypto winter’. According to the twins, the geopolitical situation and the economic concerns have only added to the problems. They went on to say that they were not the only ones dealing with the turmoil.
Another US-based crypto exchange, Coinbasehad also reported recently that its revenue had declined almost 27% as compared to last year and overall usage has also gone down. The last couple of weeks have proven to be quite brutal for the crypto space. The sector saw almost half a trillion worth of its market cap wiped out when one of the most popular stablecoins, pegged to the US dollar, TerraUSDcollapsed overnight. It remains unclear if this recent crash is the beginning of yet another crypto winter. This refers to a bear market that happens on a cyclical basis for this particular asset class and could go on for a few years.
However, the fact that crypto exchanges are noting a decline in trading volumes is one indication that a crypto winter may be inevitable. The last time crypto winter had hit was back in 2018 and it had gone on till the fall of 2020. During this time, there had been lots of layoffs and cryptocurrencies saw their values plunge significantly. The Gemini exchange was founded in 2014 and as of its latest funding round, it is valued at a whopping $7.1 billion. Numbers indicate that the exchange employs about 1,033 people, which means at least a 100 people are going to lose their jobs.
The exchange has already shut down its physical offices for protecting the privacy of its employees. A calendar invite will be issued to those who will be impacted. This will be for individual consultations in order to discuss health care benefits and separation packages. The remaining employees will participate in a ‘standup’ on Friday to talk about the company’s future. According to the memo, Gemini is interested in focusing on products that are vital to its mission. The brothers said that even though the decision was a tough one, it would help Gemini get better.
BitMEX and Robinhood are some other fin-tech startups that have also cut down their workforce recently. But, even with crypto companies reducing their staff numbers, venture capitalists are still making investments in the space. Recent announcements included one from Andreessen Horowitz about a fund worth a massive $4.5 billion solely dedicated for investing in blockchain and crypto companies. Likewise, Binance also announced a similar fund worth $500 million that is aimed at making investments in Web3 startups. But, this could also slow down if the crypto market continues its decline.