Bearish Bitcoin Market Claims More Victims as Kraken Downsizes Staff by 30%
The extreme bullish steam that has prevailed for several months has led crypto firms to mass layoffs. Kraken is no exemption to mass layoffs plaguing the crypto ecosystem. The Kraken chief executive Jesse Powell announced that the crypto firm is laying off 1100 workers. The decision by the San Francisco-based crypto exchange will reduce the headcount by 30%.
Cause of Layoffs
Recently, the outgoing chief executive Powell admitted the recent wave of layoffs is inevitable for crypto employers given their exposure to a bearish market and recession fears in the broader economic space.
In a previous address, Kraken founder Powell attributed the crypto industry meltdown witnessed in 2022 to geopolitical and tightening macroeconomic trends. In particular, Powell noted that the factors mentioned above were a hindrance to financial markets. As such, fewer sign-ups and declining trading volumes were realized by Kraken exchange platforms.
Powell pointed out that the tight business climate prompted Kraken to reconsider its hiring efforts and discard huge marketing commitments. Nevertheless, the adverse influences have persisted in tightening financial markets activities and causing exhaustion of preferable options Kraken could leverage to match costs with demand.
The current layoff will lower Kraken’s headcount to 2567, marking a return to the staff number the exchange had a year ago. Kraken realized the 30% staff expansion as millions of clients signed up to the platform fueled by the bullish market.
Impact of Bearish Crypto Market
The bearish pressure experienced across the crypto space has downed several firms. Besides Terra’s collapse in the second quarter, Bitcoin price is hovering around $16000 to mark a 75% nosedive from the $69,000 realized in 2021. Kraken is also a victim forcing a restructuring of its plans and operations. In particular, Kraken anticipated expanding its hiring plans by adding 500 jobs annually.
To the contrary, Kraken has announced the departure of 30% of its staff, citing the harsh economic climate for crypto firms. The crypto exchange firm has announced offering 16 weeks of severance pay to the laid-off staff, performance-related bonuses, and a 4-months post-departure healthcare package.
Optimism on Future Bullish Market
Kraken’s outgoing chief executive portrays optimism in the strategy to downsize its staff as the basis of matching cost to the demanded services. Nevertheless, Powell acknowledged the firm’s high expenditure extends beyond the generous compensation perks it now aims to reduce.
The company incurred a $362,158 settlement for executing 826 transactions violating sanctions imposed by the US Treasury against Iran. While the digital asset exchange confessed it was an internal discovery and voluntarily self-reported to the authorities, it will invest another $100,00 towards sanction-compliance controls.
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