In a memo sent on Tuesday to the employees, Tyler and Cameron Winklevoss, the twin brothers and founders of Gemini stated,
“This is where we are now, in the contraction phase that is settling into a period of stasis — what our industry refers to as ‘crypto winter,’” as reported by Bloomberg.
The twins further added that the current macroeconomic scenario and geopolitical turmoil exacerbated the situation.
The combined market cap of cryptos has fallen in the past few weeks by about 50%, from the highs of $2.2 trillion to $1.2 trillion. Bitcoin and Ethereum have plunged by approximately 40% and 50%, respectively. The billionaire brothers believe that the turbulent market conditions are likely to persist for some time.
Founded in 2014, Gemini was one of the early adopters of cryptocurrencies. The company offers several services, including delivery trading, leveraged trading, and custodian facilities.
Gemini’s mission and faith in the “crypto revolution” remain intact, but the current transitory phase forced them to reconsider the size of their workforce.
The New-York based company’s physical offices will remain closed as the US Commodities Futures and Trade Commission (CFTC) has also filed a lawsuit against the company for allegedly presenting false or misleading information on the potential risks of bitcoin contracts, which were to be launched in 2017.
Gemini finds itself in a rough spot over the looming fears of the added lawsuit. To discuss the next course of action, the company plans to hold a meeting on Friday. The firm is also willing to conduct one-on-one interactions with the laid-off staff and present a severance package, the co-founder stated in the memo. Linkedin’s data shows the company has just over 1000 employees.
In February, and before that, in November, the co. had raised funds of $400 million, which valued the firm at $7.1 billion. Investors including Tim Draper and Commonwealth Bank of Australia had participated in the fundraising. Despite raising funds very recently, Gemini couldn’t hold on to its employees due to the downturn in the crypto market.
Gemini isn’t the only firm affected. Crypto exchange Coinbase, the biggest competitor, has slowed down hiring. Crypto derivatives platform, BitMEX and Latin America headquartered Bitso has laid off 75 and 80 employees, respectively. Buenbit, a crypto exchange from Argentina, has shown the door to almost half of its staff.
However, VCs haven’t stopped pouring money into crypto start-ups. Andreessen Horowitz raised a $4.5 billion dedicated crypto fund last week. Binance’s venture capital arm is building a $500 million crypto fund.
Downsizing seems to have affected chiefly the crypto exchanges that rely on trading volumes for revenues. In recent weeks, trading volumes have dropped significantly with the onset of bear markets, where retail investors have been historically on the fence.