Antonio Juliano, the CEO of the decentralized derivatives exchange dYdX, announced a 35% layoff. He thanked the former employees for their work and explained the layoffs as the need to “revitalize” the exchange
Crypto companies dYdX and ConsenSys have announced new rounds of layoffs. Here's what's happening and why American regulators are being blamed.
dYdX, a decentralized derivatives exchange, will lay off 35% of its workforce. In a statement, CEO Antonio Juliano thanked the departing employees for their contributions and explained that the layoffs were necessary to "revitalize" the exchange, which he said was "different from the company that dYdX must become."
"I have seen this over and over, and it will continue," Juliano added. "What we are building is much larger than just a company, and this you will always be a part of."
The layoffs at dYdX follow ConsenSys' recent decision to cut its staff by 20%. In a statement, ConsenSys CEO Joseph Lubin cited unfavorable macroeconomic conditions, uncertainty over crypto regulation in the U.S., and the cost of a legal battle with the Securities and Exchange Commission (SEC).
"The broader macroeconomic conditions over the past year and ongoing regulatory uncertainty have created broad challenges for our industry, especially for US-based companies," Lubin wrote in a memo to employees.
ConsenSys, the developer of the MetaMask wallet and other blockchain tools, will now focus on its core revenue drivers, in line with a strategy adopted earlier this year. The company's flagship products, MetaMask and Linea, a second-layer Ethereum network, will serve as the basis for further development.
The laid-off employees will receive support after leaving the company, including severance pay based on length of service, assistance with future employment, and expanded health benefits, according to the memo.
Lubin told Fortune that the layoffs will affect about 162 of the 828 employees working from all divisions at Consensys. ConsenSys now tops the list of layoffs in 2024, according to layoffs.fyi.
In his statement, Lubin cited the SEC as one of the reasons for the staff cuts. The regulator sued ConsenSys in June over the MetaMask Staking service, which the SEC said violated the law.
The lawsuit came shortly after ConsenSys filed a lawsuit against the SEC and five of its unnamed employees over its "oversight of ETH," asking the court to formally approve language that would not classify the asset as a security.
The SEC's Division of Enforcement closed its investigation into Ethereum 2.0, and the agency took this step after the organization sent a letter asking for clarification on the asset class when approving the spot Ethereum ETF. However, the lawsuit over the SEC's allegations is still ongoing, leaving ConsenSys to face legal costs.
The layoffs come at a time when the market is bucking trends. On Oct. 29, the Bitcoin (BTC) rate rose from $70,000 to just over $73,600, approaching the historical maximum of $73,777. Since the beginning of the month, the cryptocurrency's value has grown by 12%. Analysts attribute this trend to projections for the U.S. presidential election.
Interestingly, the growth of Bitcoin is also explained by the situation in the U.S., which the CEO of ConsenSys previously complained about, explaining the layoffs.
Several factors are driving the increase in Bitcoin's price. In particular, there is growing interest from large companies, such as BlackRock, in Bitcoin ETFs, which is attracting significant investment. Recently, there was an influx of $2.7 billion into Bitcoin ETFs in the U.S., which helped attract new investors and increase the price.
Moreover, the desire to protect against inflation is having a significant impact on the market. Many investors are turning to limited assets, such as Bitcoin, to preserve their savings amid a weakening dollar and rising inflation.
dYdX cuts staff while competitors gain momentum
Since the beginning of the year, the crypto market has been recovering from a long crypto winter, with many exchanges ramping up their growth. According to Bloomberg, Crypto.com, Binance, Coinbase, Gemini, and Kraken are hiring as cryptocurrencies like Bitcoin rise—not dYdX, though.
When announcing the staff reduction, Juliano mentioned that in its current form, the exchange is different from what it should be, without specifying what exactly he meant. However, further development will require human capital capable of reviving the platform.
Therefore, announcing a 35% staff reduction against the backdrop of crypto exchanges trying to get the most out of the current rally looks illogical, to say the least, but Juliano is hardly worried about FOMO.
How the dynamics of layoffs in the crypto industry have changed
According to layoffs.fyi, Q1 2023 was the peak in layoffs since 2020, when more than 167,000 employees lost their jobs. However, in 2024, the situation
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