Employee Layoffs in the News Yet Again
The market pressure in the cryptocurrency sector seems to be taking a toll on the exchange platforms. Employees are the worst affected due to this, bearing the brunt for the dwindling trade volume. Cryptocurrency startup, Shapeshift became the latest victim of this current scenario. It recently laid off 37% of its employees, which is around one-third of the total employee strength.
According to CEO, Erik Vorhees, a range of difficulties influenced the decision, one of them being the tough trade climate. After the recent layoffs due to regulatory pressures in crypto startups like Consensys, Bitmain, SpankChain, and Steemit, Shapeshift followed suit.
What were the Major Reasons Behind the Layoffs?
Voorhes explained that a lot of decisions worked against them. The company seemed to be under tremendous pressure due to increasing legal liabilities in the cryptocurrency segments.
Vorhees went on to state that the company grew too fast and spread its wings into multiple product areas. Shapeshift has been working with Coincap and its recent acquisition Keepkey.
Keepkey and its other areas of development shifted the company’s focus from its central business model. This resulted in a lack of dedication towards the growth of the firm’s major offering, Shapeshift.
Additionally, last year Shapeshift announced a know-your-customer(KYC) check, which caused it to lose a major chunk of its clients. The decision was, however, a sign of the company submitting to regulatory pressures, which required users to submit and verify their identities.
“Cryptocurrency, a Harsh Mistress”
CEO Eric Voorhees gave out a detailed statement with apologetic undertones however went as far as calling cryptocurrency ‘a harsh mistress’. He went to state that:
“I am sorry this happened. Your confusion, your sadness, your anger… all of it is understandable, and I am sorry to put you through it. Your contributions — of effort, of personality, of experience — remain part of our fabric. Though it has ended, we are improved by our time with you, and I hope you find yourselves improved by your time with us.”
Explaining the company’s stand and growth perspectives, he gave out a statement reflecting the reason behind the layoffs.
“So we started exploring every nuance of complex financial services regulation. As we stepped into this mire, immense legal bills and risk assessment forced resources to be diverted away from important parts of the company.”
The way Forward for Shapeshift
Shapeshift has now been looking to revamp its structure and develop a ‘new Shapeshift’ which where the focus of the company will be restoring customer faith in third-party exchanges. It also aims to mitigate the custodial risks involved in trading cryptocurrencies.
Shapeshift refused to comment whether the layoffs are similar to the ones that happened in Steemit and Consensys.
A Feather in the Peacock’s Tail
It remains to be seen, which other companies will follow suit as Shapeshift is just a ‘feather in the peacock’s tail’ with many companies in line to reduce their cost of operations.
As a majority of trading firms are heavily-crypto-invested, many of the smaller firms which are unheard of, have already folded up or reduced a chunk of their employees to remain in contention for running their businesses.