Peter Thiel-Backed Crypto Lending Startup BlockFi Cuts 20% of Staff as Bitcoin Crashes

The logo of the BlockFi cryptocurrency platform.

Budrul Chukrut | SOPA images | Light Rocket via Getty Images

Crypto lender BlockFi is cutting around 20% of its staff as the company sees a dramatic drop in digital currencies and heightened concern over a weakening economy.

CEO Zac Prince said in a tweet on Monday that BlockFi has been affected by the “dramatic change in macroeconomic conditions”, which has had a “negative impact” on growth.

Backed by venture capitalist Peter Thiel, BlockFi has grown dramatically in recent years, benefiting from low borrowing costs and rising cryptocurrency prices. Before the latest cuts, the company expanded from 150 employees at the end of 2020, to more than 850.

BlockFi, which offers a popular savings product that allows customers to accumulate interest on their digital currency holdings, has raised more than $957 million since its launch in 2017 and was reportedly targeting a valuation of close to $5k. million last year. However, the industry publication The block reported last week that the company was in the process of raising a downside round at a valuation of around $1 billion.

Crypto firms in general are looking for ways to cut costs as investors move away from riskier assets, reducing trading volumes. Bitcoin is down nearly half this year after falling 15% on Monday, while Ethereum has lost two-thirds of its value in 2022, falling 16% at the start of the week. the The crypto market has fallen below $1 trilliondown from $3 trillion at its peak in November 2021. recently announced a staff reduction of 260 peopleas has Gemini, which said it would lay off 10% of its workforce, a first for the US-based cryptocurrency exchange and custodian. Coinbase, meanwhile, has extended its hiring pause for the “foreseeable future.” ” and plans to rescind some job offers.

Celsius, another cryptocurrency lender, has just paused all withdrawals and transfers between accounts, given “extreme market conditions.” Celsius has lent over $8 billion to clients, making it one of the biggest players in the crypto lending space.

BlockFi publicly distanced itself from Celsius in a tweet on Monday, announcing that it “has no exposure to Celsius” and had “never worked with them as a partner.”

Prince said that BlockFi’s primary goal is “to achieve profitability” and that the company is “here for the long haul.”

In addition to job cuts, the platform is also cutting marketing spending, eliminating non-critical vendors, reducing executive compensation and slowing headcount growth, according to a blog post from co-founders Prince and Flori Marquez.

Prince said customers would not be affected by the cuts.

“Clients will not experience any material change in the quality of service they expect, their funds are protected and all platforms and products continue to operate as normal.” prince tweeted.

While that may bring some comfort to people who have entrusted the company with their money, BlockFi has faced increased scrutiny from regulators.

In February, the company agreed to pay a $50 million fine to the US Securities and Exchange Commission, as well as to another $50 million in fines to 32 states to settle similar charges related to their popular interest-bearing crypto accounts.

CLOCK: The crypto market has not yet bottomed

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