Cryptocurrency exchange Kraken has laid off 1,100 people, or 30% of its workforce, according to a Wednesday blog post citing current market conditions.
“We are extremely grateful for the contributions of those impacted by today’s announcement and we’ll do our best to help them transition to their next opportunity,” wrote co-founder and outgoing CEO Jesse Powell.
Affected employees were notified Wednesday morning. All are eligible for 16 weeks’ severance pay, four months of continued health care benefits, an extended window to exercise their vested stock options, and outplacement support. Employees on company-sponsored visas will receive immigration support, and those eligible for a performance bonus will be paid sums determined by management.
“Since the start of this year, macroeconomic and geopolitical factors have weighed on financial markets. This resulted in significantly lower trading volumes and fewer client sign-ups,” Powell wrote. “We responded by slowing hiring efforts and avoiding large marketing commitments.
“Unfortunately, negative influences on the financial markets have continued and we have exhausted preferable options for bringing costs in line with demand,” he wrote.
The staff cuts put Kraken’s headcount roughly where it was a year ago.
One of the world’s longest-running crypto exchanges at 11 years old, Kraken is no stranger to market fluctuations. It was affected by the first crypto bear market in 2011, when a hack caused the price of Bitcoin to fall from $32 to $0.01, and has weathered the four subsequent prolonged downturns.
The current “crypto winter” was teed off by a fall in the price of Bitcoin, starting in November 2021. After reaching an all-time high above $68,000, it has cratered by 75%, and was worth just over $17,000 as of Wednesday.
Kraken’s strategy “has always included thoughtful cost management and spending,” Powell said in the blog post.
The layoffs “will allow us to sustain the business for the long-term while continuing to build world-class products and services in selective areas that add the most value for our clients,” he wrote.
Layoffs have plagued the crypto sphere this year. A running CoinDesk report tallies more than 26,000 crypto jobs that have vanished this year. While some companies have seen two rounds — crypto exchange BitMEX laid off 75 people in April and an additional 50 people in November, and Crypto.com followed cuts of 260 in June with cuts of 2,000 in October — Wednesday’s announcement represents the first recent downsizing for Kraken.
The company announced a global hiring push in June, seeking 500 new employees to fit its “anti-woke” and “crypto-first” culture that garnered national attention around that time.
“Kraken's workforce grew throughout the crypto bull market as they moved to support a greater universe of coins, offered new services to customers including staking, and expanded into new territories,” Bradley Duke, co-CEO at ETC Group, an exchange-traded product provider, told Banking Dive.
“As painful as this must be for the employees that have been retrenched, it seems completely sensible that they should ‘rightsize’ their workforce at a time of low volumes in the depths of a crypto winter,” Duke said. “Management in any other industry would do the same faced with tough market conditions.”
Powell said he’s confident that the layoffs will allow Kraken “to deliver on our mission, which the world needs now more than ever before.”
“I remain extremely bullish on crypto and Kraken,” he said.
Wednesday’s layoffs wouldn’t mark the first time this week Kraken has made headlines. The crypto exchange agreed Monday to pay $362,000 to the Treasury Department after it processed more than 800 transactions on behalf of individuals in Iran between 2015 and 2019. Kraken self-reported the violations to U.S. sanctions, making the penalty far less than the maximum $272 million Treasury could have demanded.