BlockFi Initiates ‘Voluntary Separation Program’ To Further Trim Headcount

Less than three weeks after FTX struck a deal to acquire BlockFi and provide it with a $400 million loan, the cryptocurrency lender wants some employees to leave voluntarily.

The Hoboken, New Jersey-based firm is giving employees the option to resign in exchange for 10 weeks of paid leave and 10 weeks of health insurance, Decrypt reported on Tuesday, citing a BlockFi employee. 

Staff members have reportedly been told they will be eligible for unemployment if they accept the offer. It isn’t clear how many employees will be offered the buyout.

A BlockFi spokesperson said the company initiated a “voluntary separation program to right-size our organization for the current market environment.”

“This is not an action we took lightly and want to ensure that employees have resources to consider the decision that is right for them,” the spokesperson told Blockworks via email. “BlockFi continues to be fully operational and all client funds are safeguarded.”

The company publicly announced in mid-June it would cut 20% of its staff. CEO Zac Prince said at the time that a “dramatic shift” in macroeconomic conditions had negatively impacted its growth rate. Shortly after, Blockworks learned the firm parted ways with its head of US trading, Jason Wilkinson.

Unlike rival lenders such as Celsius and Babel Finance, BlockFi managed to avoid withdrawal freezes on its platform. The firm also admitted to an $80 million loss tied to its exposure to crypto hedge fund Three Arrows Capital, but it said this is a fraction compared to losses reported by other lenders. 

Notably, BlockFi was propped up by FTX which initially agreed to support the firm with a $250 million revolving line of credit before reaching an agreement to purchase it entirely.

Concerns were also raised about positions BlockFi might have in the Grayscale Bitcoin Trust, which is down nearly 60% year to date. But Prince confirmed the firm itself has no exposure to the fund and is unwinding loans in which shares are held as collateral.

He recently said on Twitter that BlockFi shouldn’t be compared to its competitors that shut down and have impending losses. 

Several employees at cryptocurrency firms including Coinbase, Gemini and Crypto.com have lost jobs in the last two months, but it now appears a cost-cutting phase for the industry yet may not yet be over.

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