At the end of the year, the encryption industry is not calm. Recently, Huobi (formerly known as “Huobi”) was exposed to lay off 20% of its employees, and the upper limit of employees was controlled within 800; Coinbase carried out two major layoffs in June and November 2022, and may lay off another large number of employees in early 2023 .
Behind the wave of layoffs is the continued cold winter of the encryption market. Data shows that the latest price of Bitcoin is around $17,200, and the latest price of Ethereum is around $1,300, both of which have fallen by about 58% in the past year. The total market value of global cryptocurrencies is around 850 billion US dollars, while the highest value at the end of 2021 is 2.8 trillion US dollars, a drop of about 70%.
Deng Jianpeng, a professor at the Law School of the Central University of Finance and Economics, pointed out that it is normal for companies to lay off employees in a bear market. If the market turns from bearish to bullish, the wave of layoffs will also end. The cryptocurrency market is greatly affected by the US stock market and the US economy. At least until the end of the Fed’s interest rate hike cycle and the global macroeconomic heat gradually picks up, the cryptocurrency market will not be able to restart.
1 Fire will lay off 20% of employees
Recently, social media broke the news about Huobi’s plan to lay off 20% of its staff, as well as a series of actions accompanying the layoffs.
For example, all domestic salary payment entities will be cancelled, communicate with all employees to sign consultant contracts, cancel fiat currency salary payments, and change them to USDT salary payments, and require employees to register for Huobi accounts to receive salary payments. At present, Huobi has more than 1,100 employees, with a monthly loss of about 10 million US dollars; the company’s goal is to limit the number of employees to less than 800 after the layoffs are completed in February, and the middle and back offices are the main battlefield for layoffs.
According to the leaked information, if the layoffs still fail to make a profit after the layoffs, the layoffs will continue; and this year’s employee year-end bonus will also be cancelled, and all employees will not be given any incentives. In October 2022, after the company’s reorganization, the promotion and salary increase personnel will be reassessed and confirmed after the year. Afternoon tea, personnel assignment and various welfare subsidies will also be cancelled.
In addition, the option incentives of the management team of Huobi will be renegotiated, and a new long-term incentive communication will be made to reduce short-term income. From January 8th, a new attendance system will be implemented. Domestic employees are required to work in a centralized manner. If they do not work in a centralized manner, they will be counted as sick leave, and wages will be settled according to the local minimum wage standard.
Huobi’s move is not insignificant. An in-service technical employee confirmed to the Metaverse NEWS reporter that the above-mentioned social media revelations are basically true, and frankly admitted that he must be “working day by day” in Huo.
Xiao Xiao (pseudonym), an on-the-job account manager of Huobi, said that each department will be adjusted, and there are many departments. It is not clear which departments will be cut.
“Our department has not changed, but has merged several other departments.” Xiao Xiao emphasized that it is now a cryptocurrency bear market, layoffs are normal, and internal adjustments are also needed.
Liu Jin (pseudonym) was the manager of Huobi’s key account department before, and left after Huobi (the predecessor of Huobi) announced its withdrawal from the Chinese mainland market in 2021. “At first, Huobi rehired me, but later shelved it because of layoffs.”
Liu Jin told reporters that Huobi actually started internal friction before retiring mainland users. It has been constantly laying off employees, and the leadership has been changing. The old team employees have either been transferred or left.
According to the “Financial Times” report on January 8, Sun Yuchen, a member of Huobi’s global advisory committee, said that Huobi has not encountered financial problems. The layoffs are based on the adjustment of operational goals. “Most” of the employees who leave will be located in the Asian region.
“While the region will remain an important market, we are gradually reducing our focus on Asia,” Sun Yuchen said in the report. Earlier, Sun Yuchen said that Huobi plans to lay off 20% of its employees, and the “structural adjustment” has not yet started, and it is expected to be completed in the first quarter.
Metaverse NEWS asked Huobi for an interview regarding the layoff plan, but no response has been received as of press time.
2 The decline of Huobi
As one of the “Big Three in the World” (referring to the top three in the industry), Huobi has undergone reorganization and renaming, and now it is experiencing layoffs. Can’t help but let people sigh.
According to public information, Huobi was established in September 2013 by Li Lin and Du Jun, and has been invested by Zhen Fund and Sequoia Capital. At the end of 2016, Huobi’s cumulative turnover reached 2 trillion yuan, and it once became the world’s largest cryptocurrency exchange.
However, with the strong regulation of cryptocurrencies by domestic policies, the currency circle has also experienced two industry crises. The first time was on September 4, 2017, when seven ministries and commissions including the central bank issued the “Announcement on Preventing Financing Risks of Token Issuance”, calling for the suspension of ICOs and defining them as illegal financial activities.
“Tokens or ‘virtual currencies’ used in token issuance financing are not issued by monetary authorities, do not have monetary attributes such as legal compensation and mandatory, do not have the same legal status as currency, and cannot and should not be used as currency in the market Circulation and use.” The announcement pointed out.
As a result, all domestic cryptocurrency exchanges were ordered to close within a time limit, and new user registration was stopped. Huobi.com has also switched cryptocurrency transactions to “Huobi Global Station” and placed the exchange business entities overseas; domestically, Huobi China and other compliance entities are retained, and the business is mainly for blockchain + industry services.
At this stage, Huobi Global began to deploy overseas, setting up stations in South Korea, Japan, the United States, Russia and other countries and regions. The November 2017 monthly report stated that its new user growth was 2,055%.
The growth of Huobi Global also benefited to a certain extent from the bull market in the industry that began in the second half of 2017. In this round of bull market, the price of Bitcoin rose to around $20,000.
The second crisis was on September 24, 2021. Ten departments including the central bank issued the “Notice on Further Preventing and Dealing with the Risks of Hype in Virtual Currency Transactions”, emphasizing again that virtual currency-related business activities are illegal financial activities. Compared with the announcement of various ministries and commissions in September 2017, the announcement clarified the gray area of the exchange operation and strictly prohibited the provision of services to residents in China.
Huobi took the lead in expressing its position to cancel mainland users, and clarified the cancellation process. With the advent of the cryptocurrency bear market and the unsatisfactory expansion of overseas markets, Huobi has withdrawn from the ranks of the “Global Three”.
Finally, in October 2022, About Capital, a Hong Kong asset management company, acquired more than 80% of Huobi’s shares and became the controlling shareholder of Huobi. After the acquisition was completed, Li Lin and other Huobi executives cashed out, and Sun Yuchen joined the Huobi Global Global Advisory Committee. Huobi was subsequently renamed as “Huobi”.
According to the latest data from the third-party service provider Coingecko. Huobi ranked fifth with a trading volume of US$356 million in the past 24 hours, while Binance’s trading volume reached US$10 billion.
According to Deng Jianpeng, a professor at the School of Law of the Central University of Finance and Economics, it is expected that Huo must lay off employees. The first is that Huobi’s Chinese trading customers have basically withdrawn; the second is that the encryption market has been in a bear market in the past one or two years, and the company’s profits after the reorganization are not the same as before.
3 Aspects of sentient beings in a bear market
Data shows that the latest price of Bitcoin is around $17,200, and the latest price of Ethereum is around $1,300, both of which have fallen by about 58% in the past year. The total market value of global cryptocurrencies is around 850 billion US dollars, while the highest value at the end of 2021 is 2.8 trillion US dollars, a drop of about 70%.
The bear market is doomed. Huobi’s experience is not an exception in the currency circle. Recently, many encryption companies have announced their layoff plans.
On Jan. 6, cryptocurrency lender Genesis cut 30% of its workforce in a second round of layoffs in less than six months. In fact, Genesis is laying off 20% of its 260 employees in the summer of 2022, and CEO Michael Moro is also stepping down. Genesis is currently considering filing for bankruptcy protection.
Genesis suffered huge losses on loans to now-bankrupt trading firm Alameda Research and cryptocurrency hedge fund Three Arrows Capital. Both Alameda and Three Arrows filed for bankruptcy last year.
On January 7th, John Crain, CEO of SuperRare Labs, the developer of the NFT trading market SuperRare, announced that he would lay off 30% of his staff. He said that the aggressive growth in recent months is obviously unsustainable. He will take full responsibility for the previous over-recruitment of SuperRare Labs. this error.
Previously, on December 1, 2022, the cryptocurrency exchange Kraken stated that it planned to lay off about 1,100 employees, accounting for 30% of the total number of employees. Jesse Powell, co-founder and CEO of Kraken, said that the layoffs were due to the collapse of cryptocurrency prices and the overall economic environment; transaction volume and the number of new customer accounts have fallen sharply, and “the company has exhausted other ways to reduce expenses.”
And Coinbae, the largest cryptocurrency exchange in the United States, will also experience two rounds of layoffs in 2022.
In June 2022, Coinbase announced the layoff of 1,100 people, accounting for 18% of the total number of employees. Prior to this, Coinbase had said it would extend the hiring freeze indefinitely and withdraw “some” offers that had been accepted. In November 2022, the company will cut more than 60 jobs again.
Coinbase’s financial report shows that in the first quarter of fiscal year 2022, its total revenue fell 27% year-on-year to US$1.17 billion, while recording a loss of US$420 million. The situation deteriorated further in the second quarter, with total revenue falling to US$808 million and net loss widening to US$1.094 billion. In the third quarter, affected by the collapse of the cryptocurrency market, Coinbase’s total revenue fell further to US$590 million, with a loss of US$545 million. It was the third consecutive unprofitable quarter, compared with a profit of US$406 million in the same period last year.
On January 5, analysts at the investment bank Cowen downgraded Coinbase’s stock rating from outperform to equal to the market, and lowered the target price by more than 50% to $36. Analysts said the downgrade was driven by two key factors: low visibility into retail trading volumes in 2023 and the increased likelihood of enforcement action by the Securities and Exchange Commission (SEC). Analysts also said that Coinbase may make another major layoff in early 2023.
In addition, according to public information, Metaverse NEWS reporters counted the layoffs of some cryptocurrency companies as follows.
On November 24, 2022, the Argentine cryptocurrency exchange Lemon Cash laid off 100 employees, approximately 38% of its 296 employees.
On October 6, 2022, the encryption exchange Crypto.com will lay off 2,000 employees, accounting for about 30%-40% of the total number of employees.
On November 2, 2022, the encryption exchange BitMEX laid off 20% of its staff, about 53 people.
Jiang Zhuoer, the founder of Lebit Mining Pool, told the Metaverse NEWS reporter that it is normal for a large number of layoffs to occur in the second half of the bear market, and many companies are really out of money. In addition, because the encryption business cannot operate in China, many companies go overseas to Singapore and other overseas regions, which will inevitably increase costs; if compliance is required, the cost will be further increased.
However, Jiang Zhuoer estimated that the bear market of cryptocurrencies will not last long, and the company will usher in spring after layoffs through the winter. He said: “Be optimistic. If the current bear market of BTC is similar to the bear market in 2018, there will be a bottom sideways period in the last two months, and then the next round of bull market will start. Be pessimistic. If it is similar to the bear market in 2014, then There are still 8 months of bottom sideways.”
Deng Jianpeng, a professor at the School of Law of the Central University of Finance and Economics, believes that the cryptocurrency market is greatly affected by the US stock market and the US economy. At least until the end of the Fed’s interest rate hike cycle and the global macroeconomic heat gradually picks up, the cryptocurrency market will be able to restart.
This article is from the WeChat public account “Yuan Universe NEWS” (ID: Blockchain_Daily) , author: Xu Cihao and Liu Huaixi, published by 36 Krypton with authorization.
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related events
- Digital cryptocurrency exchange Coinbase announced 20% layoffs involving about 950 people2023-01-10
- Huobi confirmed layoffs by 20%, and Sun Yuchen contributed 100 million US dollars to supplement the reserve scale2023-01-08
- Coinbase warns that revenue will be cut in half in 20222022-12-08
- Australian cryptocurrency exchange Swyftx lays off another 35% 2022-12-05
- Coinbase’s revenue in the third quarter fell short of expectations, and its net loss narrowed by 50% from the previous quarter 2022-11-04
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