The “crypto winter” is far from over and cryptocurrency exchange ShapeShift is the latest to fall victim to its harsh ways.
In a blog post published yesterday evening, ShapeShift CEO Erik Voorhees announced that he has had to “let 37 employees go.” This has reduced the company’s size by a third.
The news comes as a result of the continued cryptocurrency bear market, as well as ShapeShift’s business model, which financially exposes the business to the volatility of the cryptocurrency market.
While this has shown to allow the company to prosper during bull runs, it seems it negatively impacts the firm in periods of downturn.
“Much of our balance sheet is comprised of them [crypto assets]. We accept the volatility, we accept the risk,” the blog post reads. “Our proclivity to attach our own fate to that of the crypto market is not altered by the recent pain.”
The post suggests the company has no plans to alter its model anytime soon, so frequent expansions and contractions of cryptocurrency businesses might just be a part of the game.
Voorhees’ is candid about the reasons behind his decision to rationalize his workforce, stating it is a combination of structural, legal, customer, and financial issues.
In short, the company grew faster than it could realistically manage, and with know-your-customer (KYC) requirements and the continued bear market, 2018 ended up being a challenging year.
Hard Fork contacted ShapeShift for further comment, and we will update this piece as we learn more.
ShapeShift isn’t the first to fall foul of the continued cryptocurrency downturn. At the start of December last year, numerous blockchain-based companies began laying off staff because they could no longer afford the financial overhead as cryptocurrencies continued to plummet in value.
Perhaps the industry needs to consider new methods of employment that are more resistant to the market‘s volatility, but that is easier said than done.
Published January 9, 2019 — 10:04 UTC