The cryptocurrency exchange Kraken is laying off 30 per cent of its workforce amid the fallout from this year’s digital asset market meltdown.
“We’re reducing our global workforce by approximately 1,100 people, or 30 per cent, in order to adapt to current market conditions,” the company said on Wednesday.
The job cuts at the world’s third-biggest crypto exchange by daily trading volume follows similar moves by rival companies including Coinbase Global and Gemini.
Many crypto exchanges have seen revenue slump as trading activity fell off in recent months with crypto prices plunging. The recent collapse of the crypto exchange FTX added to market uncertainty.
Higher interest rates and worries of an economic downturn have roiled cryptocurrencies as investors fled risky assets.
“Unfortunately, negative influences on the financial markets have continued and we have exhausted preferable options for bringing costs in line with demand,” Kraken said.
Kraken had recently expanded quickly and the job cuts are expected to return its workforce to where it was a year ago, according to the blog post.
Explaining the reasons for the layoffs, the company said hundreds of millions of new users entered the crypto space in the past few years and “millions of new clients put their trust in Kraken during that time”.
“We had to grow fast, more than tripling our workforce in order to provide those clients with the quality and service they expect of us. This reduction takes our team size back to where it was only 12 months ago,” Kraken said.
The exchange said that it has seen a drop in trading volumes and fewer client sign-ups.
“Since the start of this year, macroeconomic and geopolitical factors have weighed on financial markets,” the company said.
Kraken, which earlier slowed hiring and pulled back marketing spending, said it was forced to cut jobs as it had exhausted other measures to bring expenses in line with current demand.
“We responded by slowing hiring efforts and avoiding large marketing commitments. Unfortunately, negative influences on the financial markets have continued and we have exhausted preferable options for bringing costs in line with demand,” it said.
Earlier this month, crypto exchange Coinbase slashed jobs in its recruiting and institutional onboarding teams.
The collapse of crypto exchange FTX continues to ripple across the industry, with BlockFi filing for bankruptcy earlier this week.
The layoffs at Kraken come just days after it agreed to pay more than $362,000 in a settlement with the US Treasury Department for violating sanctions with Iran.
It also comes about two months after its controversial co-founder Jesse Powell announced he’ll be stepping down as its chief executive.
The crypto market meltdown has dragged the price of the largest cryptocurrency, Bitcoin, to around a two-year low.
The recent events have also driven global financial market regulators to seek tighter rules to govern cryptocurrency companies.