Don’t be fooled by the recent digital currency price pump. Those with inside information on how the industry is really performing continue to signal that tough times are ahead.
On January 13, Singapore-based Crypto.com announced that it would lay off 20% of its workforce. The move comes days after Silicon Valley exchange Coinbase (NASDAQ: COIN) announced further layoffs.
It’s the second wave of layoffs for Crypto.com. In July 2022, the firm laid off 260 employees representing 5% of its global workforce. CEO Kris Marszalek said the layoffs were made in the spirit of “prudent financial management” and to position the company for “long-term success.”
The digital currency markets continue to meltdown
This isn’t the first bear market the digital currency industry has experienced, and it likely won’t be the last. However, it’s undoubtedly the worst one to date.
Since LUNA/UST imploded in early 2022, wiping out hedge funds like Three Arrows Capital (3AC) and ultimately leading to the downfall of big industry players like FTX, things have been going from bad to worse in the industry. The cascade of liquidations has shown us who has been swimming naked, revealing fraud and financial shenanigans on a level that’s difficult to believe.
While Crypto.com and Coinbase have so far survived, other centralized exchanges and digital currency lending platforms have not fared so well. FTX, as already mentioned, folded virtually overnight, and exchanges like Binance and Gemini are plagued by rumors of insolvency. Several key lending platforms like Celsius Network and Digital Currency Group’s Genesis have either declared bankruptcy or are teetering dangerously close to the edge of ruin.
As the chaos continues to unfold, regulators are stepping in to bring some much-needed law and order. Recently the SEC charged Genesis and Gemini with offering and selling unregistered ‘crypto’ asset securities. SEC boss Gary Gensler has vowed to bring the industry into line, promising that the ‘Wild West’ era is over.
Will Crypto.com survive due to what its CEO calls “prudent financial management”? Time will tell, but for now, expect more layoffs, further bankruptcies, and many more charges and arrests. Things are going to get a whole lot worse before they get better.
Watch: The Future of Digital Asset Exchanges & Investment
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