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While layoffs at Big Tech giants have dominated headlines recently, crypto companies are also still downsizing, amid the crypto winter and tough global macro environment.
According to a CoinGecko study, in Jan 2023 alone, crypto layoffs reached 2,806, which is already equivalent to 41% of the 6,820 jobs lost in the entire 2022. This potentially indicates that this year’s crypto layoffs might surpass last year’s.
Layoffs at cryptocurrency companies jumped in the months of June 2022, November 2022, and January 2023, following two major fallouts in 2022.
In May 2022, the crash of Terra Luna caused significant damages to the cryptocurrency market and industry, with domino effects on major entities including Three Arrows Capital, Voyager and BlockFi. The Terra Luna crash sent crypto layoffs spiking to 3,003 in June, which exceeded the average monthly rate by 13.4 times, and was the year’s highest record in a single month.
Companies in the industry faced added pressures in early November 2022, when Sam Bankman-Fried’s cryptocurrency exchange FTX collapsed and led to further contagion effects. In the same month, 1,805 employees were retrenched from cryptocurrency companies, or 8.0 times above the average monthly rate. As investors rushed to withdraw their funds, centralized cryptocurrency exchanges alone accounted for 82.2% of the month’s retrenchments.
Crypto layoffs fell to 649 in December 2022, likely because companies were less inclined to reduce headcount during the holiday season. Nevertheless, the December downsizing amounted to almost threefold the average monthly rate.
However, redundancies jumped again in January 2023 reaching 2,806. This represented 12.5 times the average monthly rate, and was the second worst month for crypto layoffs. Cryptocurrency exchanges again accounted for 84.8% of the month’s headcount reductions, as lower trading volumes affected revenues. Overall, crypto layoffs at the start of this year have already reached 41% of the total layoffs in 2022.
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