Yahoo Finance crypto reporter David Hollerith shares the latest news in the crypto market, including Crypto.com’s plans for reducing its workforce.
Video Transcript
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SEANA SMITH: Crypto exchange Crypto.com cutting more jobs. David Hollerith has the details for us. And, David, really just speaks to the tough environment, challenging environment, that crypto is facing right now.
DAVID HOLLERITH: Yeah, by head count, retail-focused Crypto.com is estimated to be one of the largest firms in the space. And they announced about a 20% layoff around 1:00 AM this morning. So Crypto.com is well known for its huge marketing budget, which has included features like the Matt Damon ad, purchasing naming rights to the LA stadium, and also, more recently being a sponsor– one of the major crypto sponsors in the World Cup.
And Crypto.com CEO Kris Marszalek said in the announcement this morning that it was due– the cuts were due to major growth in 2022, followed by crypto’s downturn. Specifically, he named the collapse of FTX for having significantly damaged trust in the industry.
Now, following Friday’s cuts, Crypto.com’s estimated to employ somewhere between 3,600 and 4,500 workers. Their cut follows layoffs of 260 workers in June and reportedly another 2,000 between June and October. A spokesperson for the company would not comment on the current amount of employees they have. And obviously, we’re just two weeks into 2023, and crypto businesses are still fighting a hangover from last year, starting with crypto-friendly bank Silvergate, followed by another exchange, Wilby, Genesis, Coinbase, Blockchain.com, and Consensus.
Our estimates have crypto firms already having laid off about 26– or, excuse me, 2,600 workers this year. And based on those numbers and adding them with those collected by layoffs.fyi, which is a company that tracks job layoffs across the tech sector, total layoffs for the crypto space have accounted for around 11% of all layoffs across tech companies, which is about 23,000 employees so far in January.
DAVE BRIGGS: Boy, David, I’m sure glad you mentioned that LA arena, man, because I can’t imagine how an employee feels getting laid off knowing $700 million is going to name a sports arena. That is a tough pill to swallow. More crypto drama, though. Crypto firms Genesis and Gemini are being charged by the SEC for allegedly selling unregulated securities. What can you tell us?
DAVID HOLLERITH: Right, yeah. So the SEC is filing a litigation action against Gemini and Genesis, and part of it is requesting relief– monetary penalty from court, plus disgorgement for any ill-gotten gains. What that basically means is that they want to fine them. And we don’t know how much money that is. But to be clear, the SEC is not charging them– is not calling out cryptocurrencies as securities. They’re referring to the loan program that was sort of struck as a business partnership between Gemini, the crypto exchange, and Genesis, the crypto prime broker, or the closest thing crypto has to a prime broker.
And in this lawsuit, it’s just the latest problem that these two companies have been dealing with, thanks to this Gemini Earn program. Essentially, that program offered Gemini customers the ability to lend their assets for– or deposit their crypto in return for a yield. And this is like crypto lenders we know– Celsius Network, Voyager, or BlockFi. But Gemini Earn’s program is different in that Gemini never actually did anything. They created a master loan agreement and allowed their customers to use Genesis’s services.
So this runs contrary to what the SEC has previously established by way of a settlement it reached with BlockFi early last year and warning Coinbase not to launch a similar project in September of 2021. And prior to the lawsuit, Gemini’s president and DCG CEO had sort of been publicly fighting around Genesis. DCG is obviously the parent company of Genesis. And this all is kind of heading towards bankruptcy. And I think a lot of people were actually surprised the company hasn’t filed bankruptcy yet. And that might come down to how much money creditors want to put over in paying bankruptcy lawyers.
DAVE BRIGGS: Bumpy times ahead. David Hollerith, digging the Johnny Depp look you got going there. A little Jack Sparrow maybe?
DAVID HOLLERITH: Yeah, yeah, we can go with that.
DAVE BRIGGS: Good look, brother. Have a good weekend.
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