Crypto Industry Layoffs May Have Unintended Consequences

Thousands of employees have been let go at the start of this crypto winter, but experts say layoffs are not necessarily the best option for companies

article-image

Source: Shutterstock

share

key takeaways

  • Studies have shown that layoffs are likely to increase the chance of bankruptcy
  • Despite being in a bear market, many companies are still looking to hire talent

Over the past month, prominent crypto companies have laid off thousands of employees as they prepare for a long crypto winter. 

Coinbase cut 1,180 staff (roughly 18% of its team) and rescinded job offers; BlockFi laid off a fifth of its workforce; Gemini let go of an estimated 100 employees; and Singapore-based Crypto.com reduced staff by 5%, about 260 people.

Employees who are losing their jobs are most likely “marketing people, junior developers, and project managers,” Sergey Vasylchuk, CEO of Everstake, told Blockworks.

“As far as I can see from other cryptocurrency businesses, first, they lay off those overpaid and then those who are paid little but do even less. Middle developers are a much rarer victim of layoffs,” he said.

As these large companies actively downsize their workforce, citing cost reductions and increased efficiency, management teams must assess the long-term impacts of these common organizational practices.

The Journal of Business Research published findings suggesting that “downsizing could lead to a host of problems that eventually increases the likelihood of bankruptcy.” 

Firms lose valuable knowledge when employees leave, and remaining staff often have difficulty managing new workloads. Motivation and engagement are oftentimes also affected as trust in management dwindles. 

“It’s important to keep in mind that there are not only direct costs such as severance and accrued benefits, but there’s also indirect costs such as reputational damage,” Wayne Cascio, a professor at the University of Colorado’s Denver Business School and senior editor of the Journal of World Business, told Blockworks.

Cascio says voluntarily turnover the year following layoffs will often leave employers losing some of their best performers. 

“The reason why firms try to find alternatives to laying off people is to avoid that reputational damage, and it makes it easier to attract people once demand returns,” he said.

“If you think a downturn is going to last a quarter or half a year, then you probably want to take a look at alternative ways to cut costs, while retaining the talent that you currently have.”

This sentiment is echoed by Peter Cappelli, a professor of management at the University of Pennsylvania, who told the university’s business journal Knowledge at Wharton that “there is no evidence that cutting to improve profitability helps beyond the immediate, short-term accounting bump.”

Despite layoff announcements across the industry, many crypto companies are still hiring. Ryan Selkis, CEO of crypto research company Messari, announced on Twitter that the company will be hiring more than 20 new employees.

Singapore-based crypto exchange Bitget has plans to double its workforce to reach 1,000 people by the end of the year, and Ukrainian based decentralized staking provider Everstake onboarded 30 new employees since the beginning of the war with no plans to lay off any staff. 

“Responsible companies that survive the bear market will bring even more value to the industry,” Vasylchuk said. “Crypto projects that neither manage risks nor have product-market fit will leave the market. It is a good thing because they will free up resources.”


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.jpg

Research

Bluefin possibly stands at an inflection point. The token is near an all-time low yet the protocol’s spot volume market share and derivatives exchange usage have been increasing month over month since its November launch. Given its current market position and the upcoming upgrades (for both Bluefin and SUI), there may be upside potential before the increased supply growth in December. However, strong opposition from existing competitors (like Cetus and Suilend), as well as new entrants (like Aftermath), pose key challenges to Bluefin’s medium-term success.

article-image

Top Committee Democrat Sen. Elizabeth Warren in her opening statement accused Atkins of “helping billionaire CEOs like Sam Bankman-Fried”

article-image

Introducing garbled circuits for enhanced privacy and regulatory compliance

article-image

Ross Ulbricht was a freedom maximalist building freedom tech, powered by Bitcoin

article-image

Solana validators can reap benefits including payments, votes and community clout

article-image

Sponsored

WalletConnect is cementing itself as the essential connectivity layer, ensuring wallets remain the entry point for billions of users

article-image

According to a legal filing, Galaxy Digital helped boost the price of LUNA while quietly selling its tokens