On April 26, Robinhood CEO Vlad Tenev announced that the company was laying off 9 percent of its 3,400 full-time employees. As per calculations by TechCrunch, the cut would effectively result in 300 employees losing their jobs.
According to Tenev, a redundancy problem in the exchange’s workforce is the reason behind the layoff. He explained that the exchange had rapidly increased its workforce as it started gaining popularity in early 2020.
“This rapid headcount growth has led to some duplicate roles and job functions, and more layers and complexity than are optimal,” he wrote in a blog post. “After carefully considering all these factors, we determined that making these reductions to Robinhood’s staff is the right decision to improve efficiency, increase our velocity, and ensure that we are responsive to the changing needs of our customer,” he went on to add.
The popular trading service went public in 2021 at $38 per share and peaked at $85. But since then, the stock has been on a downward trend and is now trading at $10 per share.
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While the company has seen positive developments in the past few months, including a 25 percent increase in valuation this March, it has also faced its fair share of problems. One major setback was the data breach in November 2021 which affected millions of users on the platform.
However, Robinhood is not the only crypto exchange facing issues. Another platform that has been hit substantially is BitMex, one of the world’s first cryptocurrency exchanges.
According to a state regulatory report at the start of April, BitMex is laying off about a quarter of its workforce globally, which is approximately 75 employees. They are also planning to close their San Francisco office. These developments come after the company abandoned its plan to acquire the German bank, Bankhaus von der Heydt.
While talking to the online publication, TheBlock, a company spokesperson said, “BitMEX is making changes to our workforce in order to streamline for the next phase of our business. Our top priority is to make sure all employees who will be impacted have the support they require.”
But this downturn for the exchange is more likely to be caused by the co-founder’s admission of guilt in violating the U.S. Bank Secrecy Act. In October 2020, BitMex founders Arthur Hayes, Ben Delo, and Samuel Reed were charged with illegally operating a crypto derivatives platform and violating anti-money laundering rules in the U.S.
A year later, in August 2021, BitMex paid a fine of $100 million to the U.S. Commodity Futures Trading Commission to settle the charges.
The US stock market hasn’t been fairing too well since the start of the year. Yesterday was a particularly low point, as the tech-heavy NASDAQ composite fell by approximately 4 percent. Moreover, tech giants like Alphabet, Microsoft, and Netflix have shown losses in their first-quarter reports.
The overall weakness of tech stocks has also trickled down to the cryptocurrency industry. And the effect is apparent with such large crypto exchanges looking to downsize to save costs.
Fortunately, it’s not all bad news. Several crypto platforms are still hiring, which means that BitMex and Robinhood ex-employees may not be out of work for too long. Soon after the layoffs were announced, financial and crypto-related businesses including Kraken, Square’s Block Inc, and Uniswap Labs shared open roles on their career pages.
