On Monday, Sirin Labs announced that they had laid off 25% of their workforce. This reduced their employee group from 60 down to 45.
Sirin appeared to be on the cusp of some of the latest and greatest technology. They are the developers of the Finney blockchain phone and were only one of a few companies that were actually creating such devices using the technology. Even Samsung has found themselves trailing in this market before recently attempting to play catch up.
On March 21, Sirin had announced a deal with MyEtherWallet that the digital wallet would be included in all of the Finney devices. This would enable users to be able to make purchases using their smartphone by using their digital wallet, knowing that the transactions would be protected through the blockchain technology.
With the added features, it was expected that Finney sales would go through the roof, but things did not work out that way. The sales were “below what we expected” according to the report.
Why the sales did not reach its potential has been an interesting debate. The first concern has been that cryptocurrency values have been on the decline. Sirin reports that this has had a dramatic effect on sales because it has decreased the amount of currency people have available to make purchases. Plus, it diminishes the need that consumers would have for a wallet as part of the smartphone because decreased assets would be available to them.
Even with this is a concern, sales simply did not match projections. The addition of the digital wallet, as well as the use of blockchain technology, simply did not entice consumers to want to purchase the devices, especially at nearly $1000 for a new phone.
In addition, CEO Moshe Hogeg finds himself in legal peril, which could also be causing concern among consumers. Hogeg and two of his partners are currently being sued in a California court for $50 million related to claims of violations of a venture agreement between the three and a group of investors across the globe. The investors claim that hundreds of millions of dollars have been improperly used in violation of the agreement.
Recently, Hogeg reached an agreement to settle another lawsuit. The $2 million settlement was paid as part of a suit alleging misappropriation of funds from a previous ICO. Stox, another company owned by Hogeg which was included in the settlement, closed its operations in Israel late last year, laying off all of their employees.
Clearly, there is a concern as to what direction Sirin will be taking in the future. The vultures are circling.
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