Two Companies Announce More Layoffs: What's Happening and What Does the SEC Have to Do With It
Date: 2024-10-31 Author: Oliver Abernathy Categories: BUSINESS
The CEO of decentralized derivatives exchange dYdX, Antonio Giuliano, announced the layoff of 35% of its staff. In his address to former employees, he thanked them for their contribution and explained that the layoffs are due to the need to “revive” the exchange, since “in its current form, dYdX is not what a company should be.” Giuliano also noted that the project they are building is much bigger than just a company, and former employees will always be a part of it.
The layoffs at dYdX come amid ConsenSys’ recent decision to cut its staff by 20%. ConsenSys CEO Joseph Lubin explained that the decision was influenced by unfavorable macroeconomic conditions, uncertainty around cryptocurrency regulation in the United States, and the costs of litigation with the Securities and Exchange Commission (SEC). Despite this, Lubin emphasized that the company's financial position remains stable.
Lubin said that ConsenSys will focus on key revenue streams, including flagship products such as MetaMask and the second-layer Ethereum network Linea. The laid-off employees will receive support, including compensation payments, assistance in finding a new job, and expanded health benefits. About 162 employees out of 828 working in various divisions of the company are expected to be laid off.
The role of the SEC in a series of layoffs
Lubin noted that one of the reasons for the layoffs was the actions of the SEC. In June, the agency filed a lawsuit against ConsenSys, accusing the company of violating the law through the MetaMask Staking service. The lawsuit comes shortly after ConsenSys filed a countersuit against the SEC and five of its employees, demanding clarification of the status of ETH and its delisting.
The SEC's Division of Enforcement has since suspended its investigation into Ethereum 2.0. However, the litigation is ongoing, resulting in increased legal costs for ConsenSys.
Market Paradox
Interestingly, the cuts were announced amid a rally in the crypto market. On October 29, Bitcoin rose to $73,600, close to its all-time high of $73,777, and has increased by 12% since the beginning of the month. Analysts attribute this rise to the upcoming US presidential election and the growing interest of large companies in Bitcoin ETFs, such as BlackRock. Recently, $2.7 billion was invested in a Bitcoin ETF, which also attracted new investors.
Additionally, the market is affected by the desire to protect against inflation: against the backdrop of a weakening dollar, many investors choose Bitcoin as a way to preserve their savings.
dYdX's position in the context of market growth
Amid the growth of the crypto market, many exchanges such as Crypto.com, Binance, Coinbase, Gemini and Kraken are actively hiring employees. However, dYdX has chosen the opposite path: Giuliano said that the current format of the exchange does not correspond to his vision, although he did not specify the details. Reducing 35% of the staff against the backdrop of the active growth of competitors looks unusual, but, according to Giuliano, qualitative changes are required for the further development of the platform.
Dynamics of layoffs in the crypto industry
According to layoffs.fyi, the peak of layoffs in the industry occurred in the first quarter of 2023, when more than 167,000 people were laid off. In 2024, the situation stabilized: 57,000 employees lost their jobs in the first quarter, 43,000 in the second, and 38,000 in the third. The story of dYdX and ConsenSys in this context looks more like an exception than a rule.
