ConsenSys Lays off Over 10% of Workforce as Crypto Bear Market Bites

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ConsenSys is the latest crypto-linked firm to
have run into financial trouble as crypto prices
lost 90 percent in 2018.

Blockchain outfit ConsenSys, founded by
Ethereum co-founder Joseph Lubin, has
reportedly laid off over 100 of its
employees – roughly 10 percent of the
Brooklyn-headquartered firm’s
workforce.

According to sources with knowledge of
the matter, the layoffs affect different
departments and different regions. The
sources did not confirm the exact
number of employees that have been
dismissed.

Established in October 2014, ConsenSys
is focused on building a growing
ecosystem of developers that work
on decentralized applications and
infrastructure for the Ethereum
blockchain. It also advises enterprises
and governments globally.

The company currently has a headcount
of around 1200 employees, spread from
New York to London to Singapore.

ConsenSys is the latest cryptocurrency-
linked firm said to have run into
financial trouble as cryptocurrency
prices struggle to recover from a steep
decline throughout 2018.
Other cryptocurrency operators have been
laying off large swathes of their
workforces over the past few months as
the market crash hits businesses.

When it rains, it pours

From a price perspective, around $120
billion has been wiped off the value of
Ethereum this year, which has lost a
staggering 90 percent from its peak in
January. The network has also faced
intense scrutiny over scalability,
economic abstraction and the loss of
reservation demand.

While Ethereum’s bear market is not out
of the ordinary, the regulatory scrutiny
on initial coin offerings has compounded
these negative forces for related
startups, including ConsenSys. This
comes after a relentless ICO boom, in
which thousands of startups
bootstrapped the Ethereum protocol to
launch their own token sales.

Things got worse over the past few months as well, as
the US authorities significantly widened their crackdown on ICOs,
putting hundreds of cryptocurrency startups at risk. Despite displaying a
fairly positive attitude towards blockchain technology in general, the
SEC is still bothered by the structure of many ICOs.

Existential Crisis
The layoffs are doubtlessly connected to
the letter sent by Lubin to ConsenSys
employees warning of
a reevaluation and restructuring of the
business. In the letter, which was seen
by Breaker Magazine , he said that the
company will be made more efficient by
being more strict when it comes to
selecting projects to support, and by
axing the less profitable ones.

Lubin told Breaker : “We’re going to get a
lot more rigorous in terms of milestones
and timetables…dissolving projects if
we’ve come to the conclusion that our
earlier assumptions were incorrect.”
According to Forbes estimates , Lubin’s
fortune dropped to less than $1 billion
from $5 billion in early 2018. The
prolonged bear market also calls into
question how long he can continue to
fund ConsenSys, which is losing more
than $100 million a year as almost all of
its businesses are in the red, with few
showing hope of profitability.

Source : https://www.financemagnates.com/cryptocurrency/news/