market downturn - Pwim.Net

Coinbase to Taper Down its Hiring Plans amidst Unfavorable Market

Nasdaq-listed cryptocurrency exchange Coinbase Global Inc is tapering down its plans to hire more staff this year as current market realities do not permit it.

According to a blog post from Emilie Choi, the company’s President and Chief Financial Officer, the move is necessary in order to let the company prioritize what truly matters so that the exchange, dubbed America’s largest, can exit the current harsh market realities better and stronger.

“To ensure we’re best positioned to succeed during and after the current market downturn, we’re announcing we’re slowing hiring so we can reprioritize our hiring needs against our highest-priority business goals,” she said, adding that the firm is being rigorous with its “resource prioritization so we can emerge from this down cycle even stronger than we are today.”

Despite the fact that Coinbase considers growing its workforce as a yardstick for growth, it said the current market realities have pushed it to reassess its hiring needs. Emilie pointed out a green light in the decision as it will afford the company to let those already hired to be properly integrated into the firm’s corporate culture.

Coinbase made history when it became the first mainstream centralized cryptocurrency exchange to go public via the direct IPO route back in April 2021. A year down the line, the company has lost a massive chunk of the valuation of its shares and is down by 74% in the year-to-date period.

Per a Reuters report, the company has seen an exodus of some of its top investors, including Azora Capital, Jupiter Capital, and Yarbrough Capital, all of which dumped the company’s shares before the massive selloff the firm experienced in May.

Despite this harsh reality, Emilie Choi reassured that the company is in a good place with a solid balance sheet. She is optimistic that the firm will survive this current onslaught as it has weathered the storm through past market downturns.

Coinbase to Revoke Job Offers Extended to Newly Employed Staff

Coinbase Global Inc, the largest trading platform in the United States is going all tough on its no-hiring plans which were announced by Emilie Choi, the firm’s President and COO about 2 weeks ago.

In a new update by L.J Brock, the company’s Chief People Officer, the no-hiring measures will be extended and some of the newly sent offer letters for employment will be revoked.

Brock said the company has had to re-evaluate its position in light of the current economic outlook which is largely unfavorable for business in general. The additional measures according to the exchange will help it curb excessive spending as it fights to come out of this unprecedented economic onslaught in a stronger way.

“We will also rescind a number of outstanding offers for people who have not started yet. This is not a decision we make lightly, but is necessary to ensure we are only growing in the highest-priority areas,” the exchange said.

The Nasdaq-listed company, however, said new hires within the compliant and security team will not be tampered with as it has a high standard to maintain and client’s funds to protect. The company said it is ready to help the affected candidates cushion the impact of the new decision. The support will range from dolling out good severance packages in line with the company’s internal policies.

“We will apply our generous severance philosophy to offset the financial impact of this decision,” Brock said on behalf of the company. “To further support impacted individuals, we are establishing a talent hub to allow them to opt-in to receive additional support services including job placement support, resume review, interview coaching and access to our strong industry connections.”

Cutting expenses is now becoming a major trend amongst exchanges as Gemini also recently announced its plans to lay off as many as 10% of its entire workforce.

Coinbase Cuts Employees By 18% as Market Outlook Remains Bleak

CEO Brian Armstrong has announced that approximately 18% of all of Coinbase Global Inc’s workforce will be laid off as the cryptocurrency trading platform strategizes to navigate the now evident crypto winter.

While Armstrong cited over-hiring in the wake of the Nasdaq-listed American cryptocurrency trading platform’s expansion in early 2021 as one of the reasons for the explosive growth, it noted that the reality of the economic outlook is not encouraging and the business has to survive in case the recession is drawn out for much longer. Armstrong said the decision to lay off the staff is to cut costs and drive increased efficiency across the board.

“As we operate in this highly uncertain period in the world, we want to ensure we can successfully navigate a prolonged downturn,” Armstrong said in the note shared with all of the company’s staff.

“For the past few months, adding new employees has made us less efficient, not more. We have seen ourselves slow down considerably due to coordination headwinds, and difficulty fully integrating new team members. We believe the targeted resourcing changes we are making today will allow our organization to become more efficient.”

Coinbase Woes is Encompassing

Coinbase stock is currently trading at $51.86, down from over $300 when it made its debut on the Nasdaq back in April 2021. While the hit the company is taking is similar to other tech firms around the world, Coinbase said it needed to be strategic as the downtrend will impact its main revenue source which is high trading volumes.

The hints to cut down on staffing were first given by President Emilie Choi who unveiled plans to stop absorbing new recruits into the Coinbase workforce. Shortly after, CPO, L.J Brock said the offer of employment to newly employed staff will be revoked.

As the final straw which broke the camel’s back is unveiled by Brian Armstrong, it closely modelled the similar move made by Gemini which cut back 10% of its employees earlier this month. However, Coinbase promises optimal compensation and support to all affected staff.

Bitcoin Is Working Despite Broad Market Downturn, Says El Salvador FM

Despite El Salvador experiencing heavy losses in its Bitcoin bet, finance minister Alejandro Zelaya has defended the country’s strategy to adopt Bitcoin as legal tender. Zelaya made such revelations in an interview on Wednesday.

While it is almost a year into El Salvador’s bet on Bitcoin, critics have urged the nation to drop the experiment as the cryptocurrency industry suffers through a bear market.

Zelaya acknowledged the setbacks but said he sees a future where digital tokens play a bigger role.

In the past, El Salvador bought 2,381 Bitcoins with public funds. However, such Bitcoin investments are currently worth about 50% less than what authorities paid for them because of the ongoing market plunge.

According to a survey conducted by the U.S. National Bureau of Economic Research, most businesses and consumers in El Salvador still prefer using hard currency to send remittances and pay for goods and services.

In January, The International Monetary Fund (IMF) urged the country to remove Bitcoin as legal tender.

In the interview, Zelaya said: “I believe in the traditional, international monetary system just as I believe that new technologies are going to help human beings in the future. So, I think making that transition is vital, and it would be wrong of us to not pursue financial innovation that could benefit El Salvador.”

Though Zelaya admitted that the use of Bitcoin as a means of exchange is still low in the country, he said he remains a believer in digital money.

“For some, it’s something new and something they don’t entirely understand, but it’s a phenomenon that exists and is gaining ground and will continue to be around in the coming years,” Zelaya said in the interview.

The finance minister stated that the largest cryptocurrency has brought financial services to a largely unbanked population and attracted investments and tourism.

Although Bitcoin’s price crash has delayed the government’s plans to issue a $1 billion Bitcoin-backed bond, Zelaya said the administration still plans to push ahead with the sale when the market improves.

The executive said the government is still moving forward with plans to build “Bitcoin City” and will announce additional Bitcoin-related projects in the next few months.

Bitcoin as Investment Opportunity

The current market crash is affecting investors worldwide, including the government of El Salvador. The country poured millions of dollars into Bitcoin and made it legal tender nine months ago, encouraging local consumers to use it for day-to-day transactions.

The decision by President Nayib Bukele to make the crypto legal tender means that all businesses are expected to accept it, alongside El Salvador’s other currency, the US dollar.

The government said it has no plans to force businesses to accept the crypto, but they should under the country’s Bitcoin Law.

The current crypto tumble has prompted more questions about El Salvador’s Bitcoin policy, especially the use of almost $100 million of public funds to buy the cryptocurrency.

Each time when the country purchases crypto, the president celebrates the move. On several occasions this year, when the Bitcoin price falls, Bukele often declares the buying opportunity on Twitter social media.

El Salvador intends to go further with its Bitcoin plan. President Bukele plans to construct a new city – Bitcoin City – to be built at the foot of a volcano that will provide geothermal energy and power with a giant Bitcoin mine.

Galaxy Digital’s Q2 Net Loss Tripled To $554.7 Million Amid Market Turmoil

Galaxy Digital Holdings Ltd, on Monday, announced its second-quarter earnings report that showed that the company has more than tripled the amount of the net loss it witnessed in the same period last year.

The digital asset manager said the expanded loss during the period was triggered by the current market downturn as well as investments in its trading business, which collectively drove unrealized losses higher during the period.

Galaxy stated that its net loss stood at $554.7 million in the second quarter, compared to a loss of $182.9 million during the same period last year.

The company said that its cash at hand stood at $1 billion while its net digital asset positions stood at $474.3 million in the second quarter.

On Dec. 31, 2021, Galaxy Digital said it had $811.1 million in cash and $1.21 billion in net digital asset positions.

The firm said its preliminary assets under management were almost $1.7 billion at the end of the second quarter, compared with $1.6 billion a year ago. However, assets under management declined 40% from the first quarter.

Galaxy is a major US-based financial services and investment management firm that provides institutions and clients with a full suite of digital assets and financial solutions.

Galaxy mentioned that its mining business made a revenue worth $10.9 million in the second quarter, and its comprehensive net income tripled from a year ago.

The company said investments it made in its trading business stood at $753.9 million at the end of June, a decrease of about 25% from March 31, majorly due to the decline in the valuations of certain investments.

The Crypto Market Plunge as Hard Lesson for Asset Managers

The crypto market experienced a full meltdown in May and June, losing $1 trillion in value within a few weeks.

The sudden and rapid collapse of popular cryptocurrencies and crypto-related firms (such as Three Arrows Capital, and Celsius Networks, among others) revealed the unstable nature of the crypto industry.

Among companies that experienced massive losses worth millions of dollars were Galaxy digital, Coinbase, and others.

This year, Coinbase has seen its stock price plunge 81% and has recently announced plans to cut 1,100 employees as it grappled with a slowdown in trading that has compelled it to abandon its growth plans. In the first quarter, Coinbase reported a loss of $430 million.

Most crypto asset managers are now struggling because fewer users on the platforms are making transactions.

Early this year, prices of bitcoin, Ethereum and other major coins began dropping as soaring inflation tightened its grip on the U.S. economy.

But all is not lost for crypto asset managers as more bounces are expected in the market. Despite recent struggles, these firms will make it through the ongoing crypto market clampdown and eventually thrive. That is because these firms have learned how to survive such downturns.

Payments Firm Bolt Scraps $1.5B Proposed Acquisition of Crypto Firm Wyre

Normal
0

false
false
false

EN-US
X-NONE
X-NONE

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:”Table Normal”;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-parent:””;
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin-top:0in;
mso-para-margin-right:0in;
mso-para-margin-bottom:8.0pt;
mso-para-margin-left:0in;
line-height:107%;
mso-pagination:widow-orphan;
font-size:11.0pt;
font-family:”Calibri”,sans-serif;
mso-ascii-font-family:Calibri;
mso-ascii-theme-font:minor-latin;
mso-hansi-font-family:Calibri;
mso-hansi-theme-font:minor-latin;
mso-bidi-font-family:”Times New Roman”;
mso-bidi-theme-font:minor-bidi;}

Bolt Financial Inc, a U.S. online checkout technology company, announced on Friday that it has pulled out from its $1.5 billion deal to buy crypto infrastructure provider Wyre Payments Inc, amid plunging valuations in cryptocurrency and fintech businesses.

Valuations have fallen across industries this year as the market has faced massive volatility. High-flying tech valuations have come under pressure this year as investor sentiment has been dampened by macroeconomic turmoil, a chill in the equity markets, and fears of a looming recession.

Fintech companies like payments processor Stripe Inc., and Swedish payments firm Klarna Bank AB, among others have seen a significant decline in their valuations.

Likewise, San Francisco-based Bolt whose valuation stood at $11 billion after a funding round in January, has also witnessed a cut in the intrinsic value of its stocks.

In a statement on Friday, Bolt said it will continue its partnership with Wyre, but cited the need for it to remain independent to allow it to focus on its core areas.

“We will continue our existing commercial partnership with Wyre to pave the path of crypto integration into our ecosystem, bringing Wyre’s innovative crypto infrastructure to the world,” Bolt’s CEO Maju Kuruvilla said.

As reported by Blockchain.News, Bolt announced intent to acquire Wyre back in April this year, and the deal was expected to be completed before the end of 2022.

Market Pullback Discouraging Buyers

Industry valuations have declined significantly in the tech and crypto sector during a price crash over the past few months.

A number of planned mergers between crypto and web3 firms with SPACs are being delayed or canceled as a result of the recent market downturn.

This year has seen the valuations for public crypto companies have fallen by about 70%. However, market observers argue that these lower valuations could make these firms increasingly attractive targets for acquisition, and this activity has already begun to pick up.

Some larger crypto firms such as FTX, and Ripple, are already looking for acquisition targets to drive industry growth and to help them acquire more users.

In early July, FTX exchange, led by crypto billionaire Sam Bankman-Fried, launched plans to buy troubled crypto companies to stem potential credit contagion.

Last month, Ripple Labs expressed interest to buy assets from bankrupt crypto lending platform Celsius.

Market watchers feel that most of the M&A activity will be experienced in cryptocurrency, meaning that crypto firms acquire their fellow crypto companies, as opposed to traditional buyers.

However, according to market observers, there is still an opportunity for non-crypto firms to capitalize on these lower valuations and some are already doing so.

Stone Ridge Shutting down Bitcoin Futures Fund, Returning Money to Investors

Normal
0

false
false
false

EN-US
X-NONE
X-NONE

Stone Ridge Asset Management, a global asset management firm based in New York, announced Monday plans to liquidate and dissolve its Stone Ridge Bitcoin Strategy Fund with the Securities and Exchange Commission (SEC).

According to an SEC filing, Stone Ridge said it expects to liquidate the Bitcoin Futures Fund next month, October 21, and from November 3, shares of the funds will not be available to purchase.

“The adviser will reduce the Fund to cash in preparation for the Liquidation Date. Proceeds of the liquidation of the Fund are expected to be distributed to shareholders in cash. The liquidation proceeds are expected to be distributed promptly following the Liquidation Date in full redemption of each shareholder’s shares of the Fund,” the filing said.

The shutdown comes as the Fund launched in late 2019 with a strategy to invest in Bitcoin (BTC) via futures contracts, failing to find interest from investors. Currently, the Fund holds only about $2.3 million in assets under management.

The Fund likely faced obstacles not just from the Bitcoin bear market but also SEC approval of several competing Bitcoin Futures ETFs, at least some of which charged fees less than the Stone Ridge product.

Stone Ridge was founded in 2012 by current CEO Ross Stevens. In 2017, the founder launched the Bitcoin-driven New York Digital Investment Group (NYDIG), where he serves as executive chairman.

Stone Ridge Asset Management and NYDIG are both Stone Ridge Holdings Group subsidiaries. NYDIG is a full-service, vertically integrated Bitcoin-only financial services company.

Market Struggles to Recover

This year, Bitcoin ETFs have not been as good investments as expected. And the same scenario is being seen in stocks in the S&P 500 (such as Netflix (NFLX), Under Armour (UAA), Ceridian HCM (CDAY), Caesars Entertainment (CZR), Epam Systems (EPAM), among others) whose performance also turned worse this year.

This year, inflation crises have tremendously impacted the economy and the stock market globally. The $822.9-million-in-assets ProShares Bitcoin Strategy ETF is one of the major ways most investors use ETFs to gain exposure to cryptocurrency.

As of June, the largest Bitcoin ETF, ProShares Bitcoin Strategy, was down 53.6% this year. Such discouraging performance shows the underappreciated risk of the new asset class because most investors were not prepared to face hard questions like What would happen during a market crash? Or What would happen if a crypto exchange company went bankrupt?’

And that makes total sense, as it tracks the price of Bitcoin. Bitcoin price itself is down more than 50% this year.

ProShares Bitcoin Strategy is not just the largest Bitcoin ETF that is suffering. The entire crypto ETF universe is not doing well this year.

And the ETFs that own big positions in Bitcoin-based companies are underperforming. The First Trust SkyBridge Crypto Industry and Digital Economy ETF, which puts a bigger piece of its portfolio in Coinbase than any other ETF, is down 69% this year.

Despite the low performance of ETFs, the industry is still pushing for the launch of more Bitcoin ETFs. Several firms have filed with the SEC to get approval to launch their spot Bitcoin ETFs.

Grayscale has been pushing for the SEC to approve their request to convert their Bitcoin trust into a spot ETF.

WisdomTree Third-Quarter Crypto Assets’ AUM Drop 36% As Market Losses Continue

Normal
0

false
false
false

EN-US
X-NONE
X-NONE

WisdomTree, a financial investment company based in New York, on Friday released its latest earning report showing the asset manager’s cryptocurrency holdings have declined by 36% and now stands at $178 million in the third quarter as of September 30.

WisdomTree said its holdings saw a decline of $87 million (36%) in the third quarter owing to the market downturn. According to the report, the company held $265 million in crypto assets at the end of the second quarter while its holding stood at $178 million at the end of the third quarter (July, August, and September).

The report indicated that the company’s crypto holdings have now reduced 56% since January, from $406 million. Overall, WisdomTree said it had $70.9 billion in assets under management at the end of this year’s third quarter.

The decline in holdings reflects the fall in crypto prices and the global crypto market cap, which has declined from $2.3 trillion in January to $1.02 trillion today.

Jarrett Lilien, WisdomTree’s President, and Chief Operating Officer said that the firm has not been deterred by the market crisis, saying that the company’s approach is to bring crypto mainstream.

WisdomTree is one of the several crypto asset managers impacted by the dull and long crypto winter. Several listed crypto business firms have lost interest from investors and faced severe downgrades from the brokerages at large.

The performance of these firms (such as PayPal, and Coinbase, among others) has been highly disappointing, with some (like BlockFi and others) recently announcing reductions of their headcounts while others (like Voyager Digital, Celsius Network, Arrow Three Capital, and others) announced bankruptcy protections.

A consistent increase in outflows from crypto investment products since the TerraUSD collapse has raised concerns over the survival and sustainability of many crypto asset management firms.

While the market downturn has made it difficult for small crypto funds to survive, it has created an opportunity for leading players in the asset management sector to rethink their risk management strategies.

Argo Shares Plunges 72% After Fundraising Fails to Go Through

Normal
0

false
false
false

EN-US
X-NONE
X-NONE

Bitcoin miner Argo Blockchain Plc on Monday raised a warning that it could be forced to shut down its business operations following a deal to raise $27 million from a strategic investor that failed to go through.

Argo said earlier this month it signed a letter of intent to sell 87 million shares to the investor as it wanted to ease liquidity pressures. However, the London-based firm did not say why the fundraising agreement had been called off.

The Bitcoin miner said it is now working to secure other deals to provide working capital for the next 12 months. On Monday, Argo said it raised about $5.6 million by selling almost 4,000 new Bitmain mining machines and is considering other funding avenues.

“Should Argo be unsuccessful in completing any further financing, Argo would become cash flow negative in the near term and would need to curtail or cease operations,” Argo said in a statement to the London Stock Exchange.

The shocking news sent the company’s shares plunging as much as 72% and traded at £8.75 at 11 a.m. in London on Monday. Argo shares have dropped about 90% this year, as a fall in cryptocurrency prices impacted the mining sector.

Why Are Bitcoin Miners Struggling?

This year, the earnings of mining firms have plummeted by falling crypto prices and rising costs. Third-quarter earnings reports clearly showed the industry’s troubles, with major U.S. publicly traded Bitcoin mining firms recording more than $1 billion in combined losses.

Several Bitcoin miners, who expanded operations in 2021 to capture more profits, are now struggling as the crypto’s values crashed.

The biggest cost historically for miners has been their energy source. As energy prices increased, while Bitcoin price plunged more than 70% from its record high last November, has left most miners finding themselves unprofitable.

Crypto miners invested massively in new mining infrastructure to gain a share of huge profits. However, Bitcoin’s hashrate, which measures the total computational power used to secure the network, has been rising with more mining machines coming online. Based on its design, the Bitcoin network has been increasing its difficulty level, making it more difficult for miners to get rewards.

The increasing difficulty means that the mining industry’s total revenue is much lower compared to the previous year and the competition for this revenue also increased.

Last week, Bitcoin miner Core Scientific raised the possibility of applying for bankruptcy protection in a statement filed with the Securities and Exchange Commission. The Miner further revealed that it will not make its debt payments coming due in late October and early November. Blockchain.News reported the matter.

In September, crypto mining data center Compute North filed for Chapter 11 bankruptcy after reports emerged that it owed $500 million to more than 200 creditors.

Jump Crypto Enters Confidential Phase in SEC vs. Terraform Labs Case

Jump Crypto Holdings has been allowed to submit papers in a secret manner, which is a key milestone in the litigation that the Securities and Exchange Commission (SEC) is pursuing against Terraform Labs and its creator, Do Kwon. In the current legal procedures, this action, which was approved by Federal Judge Jed Rakoff, represents a significant turning point throughout the proceedings. Considering the sensitivity and complexity of the matter, the papers in issue have been submitted to the United States District Court for the Southern District of New York as part of the discovery process. These materials will be processed in a private manner with the intention of protecting their confidentiality.

The cryptocurrency known as Jump Crypto, which is a subsidiary of Jump Trading, is now being investigated for its alleged role in the events that led to the devaluation of the TerraUSD (UST) and the subsequent collapse of the Terra ecosystem. This event was a significant contributor to the decline in the cryptocurrency market in 2022. The manipulation of the price of UST is one of the allegations that have been made against Jump Crypto. According to the allegations, this manipulation resulted in around $1.3 billion in profits for the company and its CEO, Kanav Kariya. The gravity of the problem and the high stakes involved are supported by these claims, which are an essential component of the lawsuit by the Securities and Exchange Commission (SEC).

Over the course of many months, the proceedings in the case against Terraform Labs and Do Kwon have been developing. The Securities and Exchange Commission (SEC) filed charges against Terraform Labs and Kwon in February, accusing them of conducting a crypto asset securities scam that was worth several billions of dollars. In the context of a larger regulatory crackdown on cryptocurrency companies and their executives, this case represents a component of that crackdown. Furthermore, Kwon himself has been subjected to legal issues, such as his detention in Montenegro for using forged travel credentials and the ensuing four-month jail term that he received as a result of his arrest. It was recently decided by a court in Montenegro that Kwon should be extradited, which means that he may be brought before a court in either the United States of America or South Korea to face charges.

Within the context of any future motion practice or trial, the court has maintained the authority to decide whether or not to make any of the private papers available to the public. In the event that such a disclosure is being considered, the court will inform Jump Crypto’s legal counsel, giving them the chance to oppose to the revelation. By using this method, sensitive information is protected from public exposure while still being protected from revelation to the general public in the event that the court deems it appropriate to do so.