- According to a representative of the company dedicated to trading digital currencies, 10% of its workforce would be discarded.
- This is the third mass dismissal of employees of that firm in less than a year.
- With this, Gemini joins the list of exchanges announcing cuts following the FTX collapse.
Despite the healthy rally in the crypto market in recent days, some companies in the sector seem to be far from overcoming their internal problems.. One of them is the Gemini exchange, which would have a new round of employee layoffs in process. This is the third in less than a year.
According to the news portal, CNBC, a spokesman for the company founded by the twins Tyler and Cameron Winklevoss, would have confirmed the snip. This person confirmed that 10% of the current employees of the exchange would be out of the payroll shortly.
Since the collapse of FTX, a significant number of companies in the crypto sector have gone into a tailspin while others struggle to stay. This last group, in which the aforementioned exchange is included, seeks to sustain itself by cutting payrolls. In that club, there are platforms of the likes of Coinbase, the most important of its kind in the United States.
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Genesis crash hit Gemini exchange
This new episode of the Gemini exchange occurs in the midst of harsh conditions for the crypto market. During 2022, the major digital currencies suffered spectacular reversals from their 2021 peaks. In this sense, the Winklevoss company unloads the responsibility of its situation on the macroeconomic conditions.
Likewise, the firm maintains that, but for bad internal actors in the crypto sector, many problems would have been avoided. All these factors led the company to carry out three rounds of layoffs in less than a year. The most recent was in July 2022, while the first was a month earlier. According to the firm TechCrunch, the company left 7% and 10% of its workers on the street, respectively.
In this third round, says the PitchBook portal, quoted on CNBC, some 100 employees would be laid off out of the 1,000 total reported in September. “We were hoping to avoid further reductions after this summer. However, persistent negative macroeconomic conditions and unprecedented fraud perpetuated by bad actors in our industry have left us no choice.
In this way, the Gemini exchange seems to be entering an alert stage, since if the problems continue they would be forced to more layoffs. Such a scenario could lead to irreversible damage to the operation of the platform.. The good state of the price of Bitcoin and the rest of the digital currencies so far is not enough to improve the outlook for this company.
The exchange is wet with the Genesis case
If something is evident, it is that Gemini is in the midst of serious matters that could lead to a painful situation. Apart from the battle it has been waging over client funds, the firm has to deal with the problems transferred by Genesis. The latter filed for bankruptcy as a result of the collapse of FTX.
Consequently, the crypto firm finds itself on the ropes in front of the United States Securities and Exchange Commission (SEC). The reason, precisely, has to do with Barry Silvert’s broken platform. The regulators’ lawsuit would be focused on an alleged sale of unregulated assets through its association with Genesis.
For context, it should be noted that Gemini Earn, the customer loan program, was supported by Genesis Trading. The latter generated great returns, but with the bankruptcy, the funds of the users of the Gemini exchange were lost.
Following the FTX crash, Genesis froze user funds and refunds after filing for bankruptcy. In this way, Gemini’s clients were left with an estimated deficit of 900 million dollars. As a consequence, the Gemini Earn product followed suit with its corresponding consequences. Its customers have banded together and are pursuing a class action lawsuit against the company for fraud. In total, some 340,000 people would have been deprived of their funds.
Gemini is the largest creditor on the Genesis list after its bankruptcy on January 19, 2023.
Other platforms that cling to life
As stated at the beginning, this is not the only company in serious trouble as a result of the bankruptcy of FTX. Among the most emblematic cases is that of Coinbase, which laid off 20% of its workforce at the beginning of January. That round of layoffs was the second from that platform since the height of winter hit the crypto market.
Crypto.com applied snips to its payroll, which was notified on January 13, when its CEO, Kris Marszalek, confirmed that he had no other options. At the time, the company said it was getting rid of 20% of its staff. The CEO lamented that the ambitious growth they had in prospect could not withstand the fall of FTX.
Another of the large crypto companies that went through the bitter pill of layoffs was Kraken. On November 30, the platform announced the dismissal of 30% of its workers. In the same way as the Gemini exchange, Kraken blamed macroeconomic conditions and the tough geopolitical situation.
As suspected on November 11, when the FTX scandal broke, all the consequences would not manifest immediately. Given the magnitude of the Sam Bankman-Fried exchange, it was rightly assumed that the aftermath would be felt in the market for months on end.
The number of small businesses that have succumbed to this cataclysm is countless. It should be noted that some already had few vital signs since May, when the Terra chain and its UST and Luna coins succumbed in a traumatic death spiral.
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The crypto market and the green shoots
But if there is something that is being demonstrated, it is that the strength of currencies such as Bitcoin is going in a very different lane than that of centralized platforms. Despite losing much of its value in 2022, the pioneering cryptocurrency has been able to sustain itself and is now moving in the field of recovery.
Within a short time, the coin created by Satoshi Nakamoto rose from just over $16,000 to as high as $23,000. This escalation happened in the midst of the pessimism and mistrust with which many investors viewed the crypto market. The curious thing about the case is that Bitcoin far exceeds all the stock market indices in the recent rally.
Enthusiasts are confident that the recovery is underway, while the most skeptical talk of a fake rally. Be that as it may, the pioneer coin seems to be creating a floor in the current price. At the time of writing, its trading value is $23,020 per coin, according to data from Coingecko.