BitGo cuts 12% of staff in a company-wide reorganization

Getting your Trinity Audio player ready...

While it’s hard times for many in the digital currency industry, bad choices made months before the current pandemic are causing more unnecessary pain for BitGo. The currency custodian has laid off 12% of its workforce, in a move that company representatives are spinning as a sort of restructuring.

The company announced the layoffs on April 17, with cuts to marketing, sales, and various other business units. “As we move into new markets with new products and services, we are making changes to strengthen the business and reorganize our teams,” a representative said.

In comments made to The Block, BitGo further explained that as the company hopes to expand, it also needs to contract:

BitGo’s evolution to become a digital asset financial services firm for the institutional market has accelerated with two acquisitions in the last quarter. As we move into new markets with new products and services, we are making changes to strengthen the business and reorganize our teams. We have made the difficult decision to let go of a small number of people totaling 12% of our workforce. It is never easy to make a decision like this and we have deep gratitude for the contributions and talent of those affected.

The question is if these layoffs would have been necessary had BitGo managed its business better. The company has had ambitions of growing beyond their current custody platform, acquiring tax management platform Lumina and security token issuance platform Harbor. While all three companies share a common investor, the amount of effort and capital that would go into merging these companies could be costly, and a reason why layoffs are necessary. It also acquired staking infrastructure provider Hedge in 2019.

What the company didn’t feel was worth further investment was Bitcoin SV (BSV). Despite generous offers from the Bitcoin Association to help BitGo prepare for the February 2020 Genesis hard fork, BitGO announced they would be dropping support for BSV, feeling that the minimal cost required to retool for the original vision of Bitcoin was more costly than it was worth.

Bitgo came to me and wanted 15 M US to support the fork. I told them to go fuck themselve and am instead investing in a couple major competitors as if they do not offer BSV they are going to die.https://t.co/2yGweUjVLy

— Calvin Ayre (@CalvinAyre) December 18, 2019

 

That decision to drop BSV, as well as their ambitious growth plans, may have doomed BitGo to future losses. If the company is expanding into trading and lending, as some sources speculate they are, they will compete with clients offering their own wallets. That, combined with no access to the only digital currency that can scale and provide utility, could mean their days are numbered.