Brisbane-based cryptocurrency exchange Swyftx has sacked more than a third of its workforce in response to the severe crypto market downturn and cascading effects of the FTX meltdown.
In an email to staff on Monday Swyftx CEO and co-founder Alex Harper said the company was axing 90 of its employees – around 35 per cent – in preparation for more tough days ahead.
“Swyftx has no direct exposure to FTX, but we are not immune to the fallout it has caused in the crypto markets,” Harper told staff.
“As a result, we have to prepare in advance for a worst-case scenario of further significant drops in global trade volumes during H1 next year and the potential for more black swan-type events.”
The crypto world is still reeling from the collapse of major exchange FTX which last month was discovered to be insolvent after suffering a liquidity crunch.
“As much as we might wish it, we do not exist in isolation from the market and that’s why we are acting fast and acting early by significantly reducing the size of our team,” Harper said.
“We do this with a sadness that is very difficult to put into words.”
This marks the second set of layoffs at Swyftx in less than six months, following the squeeze out of 74 staff in August.
At the time it was rising inflation, interest rates, and market volatility – combining to create “an uncertain business environment” – that the company blamed for its need to cut stuff.
Just a month later, the Swyftx founders were being celebrated as Brisbane’s Young Entrepreneurs of the Year before they went shopping around for investor cash claiming the capital raise was to do with global expansion efforts and not the dramatically sinking value of its bread-and-butter asset class.
The market capitalisation of all cryptocurrencies has dropped to the tune of $1.6 trillion dollars with the value of bellwether cryptocurrency Bitcoin falling by some 75 per cent from its all-time high of $69,000 per coin in November 2021 to be worth less than $17,000 today.
Earlier this year, Swyftx and share trading platform Superhero announced a $1.5 billion merger although plans to integrate the two platforms have been delayed.
Swyftx isn’t the only Australian crypto company facing some difficult decisions as the market turns sharply the other way.
Melbourne-based crypto fund Maple Finance, which acts as a kind of on-ramp for larger investments entering the crypto space, found itself caught up in the FTX contagion when Orthogonal Trading defaulted on $46 million (US$31 million) worth of loans held on Maple’s platform.
Maple said in a statement it was cutting ties with Orthogonal after it turned out the company didn’t have the cash to pay its loans.
“It is now clear that [Orthogonal Trading] have been operating while effectively insolvent, and it will not be possible for them to continue operating a trading business without outside investment,” Maple said.
“Misrepresentation like this is in violation of Maple’s agreements and all appropriate legal avenues to recover funds will be pursued including arbitration or litigation as necessary.”
Has losing money in the latest crypto crash put you off the asset class? Let us know in the comments below.