Following a series of recent layoffs and closures within the industry, top Korean exchange Bithumb follows suit by announcing it will cut its workforce in half by the end of this month. While the market is currently showing signs of optimism, this news brings an unwelcome reminder to the realities of an extended bear market.
“Voluntary Retirement” At Bithumb
Coindesk Korea broke the news of Bithumb’s plans on Monday 18th March. Details show the company will reduce its existing workforce of 310 employees down to 150. A spokesman for the firm commented:
“It is true, voluntary retirement is planned to reduce the total number of employees by 50% by the end of the month.”
Bithumb has developed a company-sponsored program to help former employees. The initiative will provide support and training to find new work. However, news of more job cuts in the crypto space is bringing further uncertainty.
So Crypto peeps. What's your guess? How long are we going to continue to endure this bear market? 6 months? 12 months? 18 months?
— The Scrooge XPRess (@etnezerscrooge) March 18, 2019
Crypto Exchanges Are Feeling The Pinch
Onchain Capital CEO, Ran Neuner, stated that crypto exchanges would continue to struggle in the coming year. He takes an unsympathetic view by attributing the difficulties to a lack of business foresight.
“I’m expecting more exchanges to shut down in this bear market. Last year everyone rushed to start an exchange. Exchanges require infrastructure that is expensive to maintain and most won’t survive this.”
The news of layoffs at Bithumb was the latest of many recent announcements, including:
The UK exchange blamed declining trade volume as the cause of pressures on the company. In a statement, the CEO, Obi Nwosu, said:
“Coinfloor is currently undergoing a business restructure to focus on our competitive advantages in the marketplace and to best serve our clients. As part of this restructure, we are making some staff changes and redundancies.”
Singapore-based Huobi ran into trouble as a result of falling Bitcoin prices. A spokeswoman for the firm said they are optimizing staffing by cutting the worst-performing employees. But she was quick to point out that opportunities remain buoyant at the core of its business and in emerging markets.
Shapeshift announced they were cutting a third of their staff as a result of their rush to expand. The CEO, Erick Vorhees, spoke about how restructuring was inevitable because the number of staff simply grew faster than the company could maintain.
At the end of January this year, the Ukrainian-based exchange shut down its entire operation. A statement on their website reads:
“Much to our regret, after this step Liqui is no longer able to provide liquidity for the Users left. We also do not see any economic point in providing you with our services. However, we do not want to return to where we were a month ago. Hence, we decided to close all accounts and stop providing our services. It broke our hearts to do that.”
As the market adapts to tougher trading conditions, and heightened scrutiny from regulators, it is inevitable that some exchanges will struggle. While it would be extreme to call any of the exchanges above bad actors, or lacking in business acumen, we must remind ourselves that market forces will decide who will survive.