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It's almost been half a year since the word "layoffs" appeared on Blockhead. Back then, the latest casualty of the job market was Binance.US but the 200-employee cut was more of a reflection of Binance's unique situation with law enforcement.
Blockhead
Indeed, industry-wide layoffs haven't really been a trend since 2023 and are nowhere near the scale seen in 2022, which saw swarms of crypto employees ushered through the exit door.
Blockhead
Blockhead
Now in 2024, the crypto industry is rejoicing in a fairly stable bull market, backed by the mighty force of TradFi. Thus, significant job cuts haven't exactly been a common occurrence in today's crypto landscape.
Nonetheless, Matter Labs, the driving force behind Ethereum scaling network ZKsync, has managed to fall victim to the curse of crypto job cuts.
Matter Cuts
In a post on X, Matter Labs CEO Alex Gluchowski revealed that the firm will be cutting 16% of its employees.
"We are restructuring the organization and parting ways with many amazing team members (~16% of the team)," Gluchowski said, adding that teams building on ZKsync Era now require a "different type of technology and support than they had previously."
I just sent this message to the Matter Labs team:
— Alex G. (∎, ∆) (@gluk64) September 3, 2024
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Today, I’m sharing the hardest change we had to make in the 6-year history of Matter Labs. We are restructuring the organization and parting ways with many amazing team members (~16% of the team). We’ve already reached out…
According to LinkedIn, Matter Labs has up to 200 employees, meaning layoffs could amount to over 30 people.
Gluchowski announced a "structured comprehensive exit package" including three months of base salary and four months of continued healthcare support. He added that he remains "extremely optimistic" about the future of Matter Labs and that the demand for the firm's tech is growing.
"We are also fortunate to have the financial resources to thrive even in a multi-year bear market. We'll continue to build and hire the right talent crucial for the next phase of Matter Labs," he said.
Custodia Chokepoint
Digital asset-focused Custodia Bank is another institution that reported layoffs this week. The bank, which offers banking services to companies, announced that nine of its thirty-six employees will be cut in an effort to preserve capital.
Founder and CEO Caitlin Long cited the Biden administration's crypto crackdown as a reason behind the forced layoffs. Speaking to Banking Drive, Long said Custodia Bank is "right-sizing so we can maintain operations while preserving capital” during Custodia’s lawsuit against the Fed or “until after Operation Choke Point 2.0 ends.”
Cardano founder Charles Hoskinson described "Operation Chokepoint 2.0" as a "coordinated effort to kill crypto."
Blockhead
Long also told Fox, "Operation Choke Point 2.0 has been devastating for the law-abiding U.S. crypto industry, and Custodia Bank has been hit hard despite our strong risk management and compliance track record."
"We are right sizing so we can maintain operations while preserving capital until after Operation Choke Point 2.0 ends or our Fed lawsuit concludes successfully."
Custodia Bank has been in a legal dispute with the Federal Reserve to obtain a master account, which is crucial for accessing the Fed's liquidity services and avoiding the high costs of operating through intermediary banks.
Not a (zk)Synchronized Cut
Aside from the timing of job cuts from Matter Labs and Custodia Bank, there doesn't seem to be a common thread between the decisions. The crypto industry can breathe again knowing that these cuts were not directly driven by market woes.
Nonetheless, both announcements once again highlight the rapid pace of developments within the industry, for better or for worse. In the case of Matter Labs, layoffs were driven by demand shifts from developers while Custodia Bank was impacted by government policy. Both are external factors and demonstrate the importance of resilience in the crypto industry.
