Crypto lender BlockFi is cutting around 20% of its staff as the company reckons with a dramatic downturn in digital currencies and heightened concerns about a weakening economy.
CEO Zac Prince said in a tweet Monday that BlockFi has been impacted by the “dramatic shift in macroeconomic conditions,” which have had a “negative impact” on growth.
Backed by venture capitalist Peter Thiel, BlockFi has grown dramatically in recent years, benefiting from low borrowing costs and the surge in crypto prices. Prior to the latest cuts, the company expanded from 150 employees at the end of 2020, to more than 850.
BlockFi, which offers a popular savings product that lets clients accrue interest on their digital currency holdings, reportedly raised more than $957 million since launching in 2017, and was reportedly aiming for a valuation of close to $5 billion last year. However, industry publication The Block reported last week that the company was in the process raising a down round at a valuation of around $1 billion.
Crypto companies across the board are looking for ways to cut costs, as investors rotate out of the riskiest assets, pulling down trading volumes. Bitcoin is down by almost half this year after plunging 15% on Monday, while ethereum has lost two-thirds of its value in 2022, plummeting 16% to start the week. The crypto market has fallen below $1 trillion, down from $3 trillion at its peak in Nov. 2021.
Crypto.com recently announced a staff reduction of 260 people, as did Gemini, which said it would be laying off 10% of its workforce — a first for the U.S.-based cryptocurrency exchange and custodian. Meanwhile, Coinbase has extended its hiring pause for the “foreseeable future” and plans to rescind some job offers.
Celsius, another crypto lender, has just paused all withdrawals and transfers between accounts, given the “extreme market conditions.” Celsius has more than $8 billion lent out to clients, making it one of the biggest players in the crypto lending space.
BlockFi publicly distanced itself from Celsius in a tweet on Monday, announcing that it “has no exposure to Celsius” and had “never worked with them as a partner.”
Prince said BlockFi’s main goal is “to achieve profitability” and that the company is “here for the long haul.”
In addition to the job cuts, the platform is also reducing marketing spending, eliminating non-critical vendors, reducing executive compensation, and slowing headcount growth, according to a blog post from co-founders Prince and Flori Marquez.
Prince said customers would not be impacted by the cuts.
“Clients will not experience any material changes to the quality of service they have come to expect, their funds are safeguarded, and all platforms and products continue to operate normally,” Prince tweeted.
While that may provide some comfort to people who’ve entrusted the company with their money, BlockFi has been facing increased scrutiny from regulators.
In February, the company agreed to pay a $50 million penalty fee to the U.S. Securities and Exchange Commission, as well as another $50 million in fines to 32 states to settle similar charges related to its popular interest-bearing crypto accounts.