In June, Crypto.com CEO and founder Kris Marszalek announced that the exchange was laying off 260 employees, accounting for 5% of its workforce. However, according to a new report, the exchange massively understated its layoffs, and it has quietly let go of over 2,000 employees as trading volume dries up in light of the ongoing bear market.
Crypto.com shot into the limelight in 2021 as it embarked on a spending spree targeting sponsorships and partnerships with some of the world’s biggest brands. These included some much publicized ads featuring stars like actor Matt Damon and NBA star Lebron James. It also paid top dollar to sponsor major sporting teams and tournaments, including paying over $700 million to rename the LA Lakers’ Staples Center, the biggest naming rights deal in history.
At the time, it was easy for Crypto.com to bankroll these splashes as most digital assets were hitting new highs, and trading volume was soaring, pushing the exchange into the Top 5 globally. However, in May, LUNA and its sister token UST crashed and sparked a wider market collapse that has seen most tokens shed over 70% of their pre-May prices. Trading volumes have dried up for most exchanges, and Crypto.com has been hit harder than most.
An investigative report by AdAge reveals that Marszalek and his team have been making every move they can to save their exchange, including laying off thousands of employees quietly and scaling back most of their sponsorship and partnership deals.
Crypto.com is a private company and is not obliged to reveal its inner workings. However, current and former employees confirmed to the outlet that just over 2,000 employees were laid off, seven times higher than what Marszalek originally revealed.
The first employees to receive the pink slip were in the marketing department. This included an entire 10-member in-house creative team in North America that had been assembled just a few months prior. The exchange had poached the members from ad agencies and marketing firms. The goal was to produce its ads in-house, which would be faster and cost less. Some of the employees on this team had worked at the exchange for less than four months, as per their LinkedIn.
In Bulgaria, Crypto.com operated an office mainly focused on customer service, housing thousands of its employees. Sources reveal that about 1,200 employees from this office left between June and August this year, a vast majority being due to layoffs.
‘The most ambitious client I’ve ever worked with’
The ‘crypto winter’ has been harsh on several exchanges in the digital asset sector. Coinbase (NASDAQ: COIN) laid off 18% of its workforce in June; Gemini‘s ‘extreme cost-cutting’ has seen it lay off hundreds of employees, as have Bitpanda, BitOasis, and Banxa.
However, no major exchange has had to lay off a bigger number of employees than Crypto.com. According to former employees and some of its partners, this is primarily down to Marszalek’s ‘overambitious’ expansion plans.
“I’ve worked with many ambitious clients before, but Crypto.com is probably the most ambitious client I’ve ever worked with,” one advertising executive who worked with the exchange in the past stated.
“They were just writing checks they could only cash when things were good,” one former employee commented.
Others compared the exchange’s expansion plan to the Internet companies that blew up during the dot-com bubble burst. Crypto.com’s Super Bowl ads only reaffirmed these comparisons.
“Like Pets.com, you have these massive, killer Super Bowl commercials, but then it’s like ‘And then what?’ I think that they were very confident in the markets and [thought] that if they just kept pushing harder, they could beat this cycle by volume,” Adam Jones, a director at New York-based digital design agency R/GA said.
The spending spree is proving unsustainable as the exchange slips further down on the rankings for trading volume processed. At its peak earlier this year, Crypto.com was in the top five alongside Coinbase and Binance. It has since then slipped further down, and as of October, it’s no longer in the Top 10 list.
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