ShapeShift To Lay-off One-Third Of Employees Amid Ongoing Bear Market
ShapeShift exchange joins a growing number of crypto-related businesses and blockchain companies that are restructuring amid massive employee layoffs as a result of a long bearish market.
The firm is set to lay off about one-third of its workforce as it looks to navigate the tough times brought on by the ongoing crypto winter.
A total of 37 employees will be sent packing, ShapeShift CEO Erik Voorhees revealed in a company blog post published on January 8.
In a note titled “Overcoming ShapeShift’s Crypto Winter and the Path Ahead,” Voorhees outlines a wide range of factors that have necessitated the change in approach as the biting “frost” continues.
ShapeShift’s heavy exposure to crypto
Voorhees notes that one of ShapeShift’s “worst financial decisions” involves their heavy exposure of the company’s assets to cryptocurrency.
According to him, it is simple to see why that decision has affected them:
‘Much of our balance sheet is comprised of them. We accept the volatility; we accept the risk. And our proclivity to attach our own fate to that of the crypto market is not altered by the recent pain.’
The downturn in the crypto market has played a significant role in the company’s, but as Voorhees points out, it isn’t the only factor leading to the lay-offs.
According to him, ShapeShift’s expansion as a company was too fast and saw it diversify into too many projects a little too soon and as a result, they “lost focus.”
The firm created CoinCap, acquired the KeepKey wallet, as well as launched several other projects that are still under development. All these initiatives “were pulling [the company’s] attention in too many directions,” all the while consuming too much of their time and money.
Growing too fast
As mentioned earlier, ShapeShift found itself growing too fast as it took on several projects at once. The ‘unchecked’ growth also saw the company’s team explode in numbers, expanding from the founding members to 125 within no time.
In 2017, the company reportedly grew by a massive 3,000%, with Voorhees bluntly noting in his blog post that the growth dwarfed the company leadership’s abilities to manage a huge team.
The rapid growth also attracted increased regulatory scrutiny, which as the CEO stated, brought on other issues like legal tussles.
ShapeShift began to explore “complex financial services regulation” and as issues mounted, growing legal bills, as well as risk assessment measures, saw key resources diverted.
According to Voorhees, a “confluence of these issues” and the company’s apparent lack of focus led to the layoffs.
As the firm’s founder, Voorhees says that the blame lies squarely at his feet noting that Shapeshift’s core business has suffered for lack of nurturing.
KYC implementation cost the company
ShapeShift also had customer related issues, as Voorhees notes in the blog. These issues arose as a result of the aggregate slump in the market and cutthroat competition.
However, one of the hard-hitting issues emanated from the firm’s decision to implement know your customer (KYC) measures. The company was positioning itself as regulatory pressure mounted within the industry, but the move proved to be unpopular with its customers.
The move to have KYC’d accounts is said to have stung the firm’s business- financially and psychologically. Voorhees says that many of their API partners left for competitors that had “not perceived regulatory risks in the same way.”
As the layoffs take effect and the company looks to move forth, Voorhees has stated that their focus is to address pain points in the crypto market- with the aim of fixing the “tragic” scenario of custodial risk.
Companies and startups alike have been forced to lay-off massive numbers of employees, including bitcoin mining giant Bitmain.
U.K.-based exchange Coinfloor, Ethereum development studio ConsenSys and blockchain-based social platform Steemit are among many others to have reduced their workforces in the aftermath of the crypto price crash.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.