FirstFT: Crypto exchanges slash jobs amid market turmoil

The red hot expansion of the cryptocurrency industry has turned into a crypto chill as investors dump risky financial assets amid a wider stock market correction.

The latest sign of the downturn in the digital financial assets industry was an announcement yesterday from the Nasdaq-listed exchange Coinbase that is was laying off more than 1,000 people, equal to a fifth of its workforce.

The market value of the world’s 500 biggest crypto tokens has slumped from a high of $3.2tn in November to less than $1tn this week. Bitcoin, the most popular digital coin, has fallen from more than $64,000 to below $21,000. It is down another 10 per cent today at $20,562.71, according to the FT Wilshire Bitcoin Blended Price Index.

Crypto investors tend to trade much more actively during bull markets. Now, sliding volumes are eating into the once juicy fees exchanges earn by facilitating trading.

“If there isn’t trading volume there is no money . . . it looks like it is going to be tough for quite some time,” said Julian Sawyer, former chief executive of crypto trading venue Bitstamp.

Coinbase had expanded to about 6,000 employees from 3,730 at the end of last year as it rode the exuberance in crypto markets.

Rivals that boomed in recent years are also tearing up their growth plans. Crypto exchange Gemini, founded by the Winklevoss brothers, said in early June it would lay off 10 per cent of its staff in “turbulent market conditions”.

In recent days Crypto.com said it would cut 5 per cent of its workforce, about 260 people, and crypto lending platform BlockFi is to lay off a fifth of its workforce, roughly 170 people. Brazil’s Mercado Bitcoin also recently laid off 90 people, about 12 per cent of its employees.

Read more on cryptocurrencies

• Celsius Network: The crypto investment company, backed by Canada’s second largest pension fund and a former Blackstone and Airbnb executive, last week shocked investors when it blocked customer withdrawals. Read how it rode the crypto bull run and then why it all unravelled.

• Background: Why are crypto lenders central to the digital asset market?

• FT Alphaville: What were all those 6,200 Coinbasers doing anyway? Questions seeking answers, in the spirit of DeFi, using decentralised reporting.

Have you been caught up in the cryptocurrency crash? Share your thoughts with us at firstft@ft.com or reply to this email and we may feature your response in an upcoming edition of the newsletter.

Thanks for reading FirstFT Americas and here’s the rest of today’s news — Gordon

Five more stories in the news

1. ECB calls emergency meeting to discuss market turmoil The European Central Bank has begun an unscheduled meeting of its rate-setters, sparking speculation it could announce measures to tackle surging borrowing costs in weaker eurozone economies. In recent days the so-called spreads between the yields on bonds of fiscally weaker eurozone governments such as Italy and Germany have widened.

2. EU begins legal action against UK The European Commission announced today it was launching legal action against the UK over the implementation of the Northern Ireland protocol, which governs trade between the province, the EU and the UK. The decision by Brussels follows the publication of legislation by Boris Johnson’s government to rip up the 2020 Brexit deal with the EU.

3. Apple scores football rights deal Apple and Major League Soccer have agreed to a broadcasting rights package worth $2.5bn over 10 years, according to people familiar with the matter. The deal follows this year’s agreement between Apple and Major League Baseball to broadcast Friday night games. Beginning next year, all live MLS fixtures will air on a dedicated streaming service available on the Apple TV app.

4. Hedge fund backed by legendary investor Julian Robertson closes New York-based Tiger Legatus Capital Management has shut its doors after nearly 13 years of trading, according to a letter seen by the Financial Times, in the latest sign of the tough conditions for managers trying to bet on the rise and fall of stock prices. The closure of Tiger Legatus comes as equity hedge funds suffer their worst start to a calendar year on record.

5. US defence group in talks to buy Pegasus spyware L3Harris, a top-10 US defence contractor, is in talks to buy the hacking technology behind Pegasus, the military-grade spyware developed by Israel’s NSO Group. The high-stakes manoeuvre would place in US hands a tool that Washington has condemned for enabling transnational repression.

The day ahead

Fed interest rate decision Policymakers at the US central bank will end discussions today on controlling rampant inflation with what could be the biggest interest rate rise for decades. It will also announce plans to shrink its mammoth $9tn balance sheet — so-called quantitative tightening. Follow news and reaction to the decision, expected 2pm Eastern time, on our live blog.

Economic data A drop in auto sales is expected to have dragged on retail sales in May. However, the so-called control group, which excludes autos, petrol, building materials and food services, is forecast to have climbed 0.5 per cent in May, from the previous month when they rose 1 per cent. US homebuilder confidence is expected to have dipped for the fifth consecutive month as rising mortgage rates threaten housing affordability for first-time buyers, weakening demand for new homes.

Nato defence meeting Ministers gather in Brussels for the two-day event, including a working dinner with representatives from Finland, Georgia, Sweden, Ukraine and the EU. On the eve of the meeting Germany proposed stationing most of the 3,500 extra troops it aims to contribute to the transatlantic alliance on its own soil rather than in Lithuania, significantly softening its initial backing for more foreign forces to be stationed in the Baltics to deter any potential Russian aggression.

What else we’re reading and listening to

Oil vs human rights: Biden’s controversial mission to Saudi Arabia President Joe Biden’s decision to travel to Saudi Arabia next month and meet Saudi Crown Prince Mohammed bin Salman is a remarkable U-turn for a president who promised to treat the kingdom as a pariah and to engage with King Salman, not his son, MBS.

The echo of 1970s policy errors Unexpectedly high inflation, wars in critical commodity-producing regions, declining real wages, slowing economic growth, fears of tightening monetary policy and turbulence in stock markets: today’s conditions were also dominant in the world economy 40 years ago, writes Martin Wolf.

‘Wall St’s toughest qualification’ struggles to regain stature I thought the CFA would prove I was a grown-up, and would help me find my finance tribe, writes the FT’s Financial Regulator Editor Laura Noonan, who ditched friends, families and parties in her late twenties to study for the revered qualification. But now, she says, finance bosses are ambivalent about the CFA’s benefits and demand for it is falling off a cliff.

Mr Goldman, Mr Sex When Financial Times reporter Patricia Nilsson started digging into the porn industry, she made a shocking discovery: nobody knew who controlled the biggest porn company in the world. Now, Nilsson and her editor, Alex Barker, reveal who is behind it. Listen to the latest episode of Hot Money, our investigative podcast series on the shadowy power structures of the porn industry.

Join the FT in partnership with Seismic at Strategies For Dealing With The Great Resignation on June 30 where we will discuss the challenges and opportunities presented by the Great Resignation, with a focus on training and coaching successful sales teams. Register today for free.

Books

What are your favourite books of 2022? This year’s much-anticipated Summer Books series is close — and, as ever, we want to hear from you. Use the comments section here to tell us.