Switzerland-based ShapeShift’s Chief Executive Officer Erik Voorhees announced via Twitter on January 08 that the cryptocurrency exchange was laying off one-third of its staff.
ShapeShift’s Crypto Winter
The tweet by Voorhees was accompanied by an official blog post on the company’s website. The post was titled Overcoming ShapeShift’s Crypto Winter and the Path Ahead and stated that 37 of the exchange’s employees had been laid off.
Voorhees explained in the post that these staff cuts were due to the cryptocurrency bear market and that the biggest as well as worst decision the company had made was to expose itself to this market.
ShapeShift’s CEO went on to reveal that the company had been “hit from four sides” in 2018. He said that the exchange faced legal issues, financial issues, customer related issues and “people and structural issues” last year, all of which combined with their “lack of product focus” led to these layoffs.
Voorhees ended the post with an apology to all affected by this move.
The Wall Street Journal (WSJ) published the results of an investigation that alleged that $88.6 million worth of funds had been laundered through 46 cryptocurrency exchanges, of which $9 million had been funneled through ShapeShift.
Voorhees has vehemently denied these allegations. He stated that his team had worked with the WSJ team for 5 months, but the information that they had provided the publication had been misreported and even omitted.
Added to that, the exchange’s decision to conduct KYC (Know-Your-Customer) checks caused them to lose a large number of customers.
The company also admitted to growing too fast and spreading itself too thin by investing in products such as CoinCap, a competitor to CoinMarketCap, as well as KeepKey.
And finally, the overall number of transactions dropped across the board, which led to a drop in the company’s revenue.
Voorhees stated that while the company had hedged for these types of risks, it was not enough to allow ShapeShift to maintain its current staffing levels.
Cuts Across the Industry
The crypto winter, as the current bear market is now being dubbed, has affected many companies across the industry.
In early December last year, ConsenSys announced a 13% reduction in its staff. It had earlier been reported that the Ethereum-based software development company could lay off between 50% to 60% of its 1,200-person workforce. However, later the founder of the company, Joseph Lubin address the report and corrected that number to 13%.
More recently, both Status, a social media chat startup, and Bitmain, the Bitcoin mining giant, announced that they too were laying off staff.