Crypto Winter pain continues – Bithumb exchange to layoff 50% of staff


Crypto Winter pain continues – Bithumb exchange to layoff 50% of staff

The meltdown in crypto valuations and the pullback in investor trading volumes, euphemistically referred to as Crypto Winter, continue to wreak havoc in every sector of the crypto community. The news today is that Bithumb, the largest crypto exchange in South Korea, has announced that it will cut back its staff from 310 employees down to 150 by the end of the month.

In its announcement, the company committed to work with its terminated staff to help them find other employment or to get the training to do so: “Voluntary retirement is part of our support program for former employees and is intended to provide assistance and training for job placement. Apart from that, [Bithumb’s] trading volume has decreased compared to the previous year, [so] we are trying to provide internal measures. We will continue to add necessary personnel for various new businesses.”

South Korea has always been a hotbed for cryptocurrencies and the trading activity that has resulted from keen investor interest in the country. Government officials, however, have not been as accommodating as the local crypto enthusiasts would like. The issues have been two-fold. First, exchange compromises have resulting in monumental losses, which research has shown as having originated from a concerted effort by North Korea to undermine the domestic economic activities of its southern neighbor. Anonymity, however, has been a bigger issue, prompting local officials to legislate that every exchange customer must have a registered bank account with a domestic Korean bank.

This legislation cut deeply into exchange trading volumes, but the volume did return. Bithumb actually ranks Number Two, right behind Binance, with volumes that average in excess of $1.3 billion per day. At these levels, there should be no financial issues, but Korean exchanges have come under attack when recent research indicated that many of these entities were inflating their true volumes, either by internally generated wash trades or by favoring “robot” trading at their exchange. In any event, Bithumb management claims that the exchange is under financial pressure due to declining volumes and tighter margins brought on by Crypto Winter.

The ravages of Crypto Winter have not been confined to Bithumb or to the North Korean market alone. Bitmain, the leader in the crypto mining world, had to cut back as much as 80% of its staff. Nvidia, a major supplier of computer equipment and graphic interface technology to the mining industry, has seen its stock values plummet 50% and more due to the decline in mining profitability.

Exchanges and crypto development efforts have also suffered. Crypto exchanges Coinsquare, Shapeshift, and Huobi have had to make significant layoffs recently. The same is true for firms like blockchain software firm ConsenSys (Ethereum) and decentralized social network Steemit. Cutbacks for these firms were 60% and 70%, respectively.

The fact remains that Bithumb will continue to operate and allocate what resources it has to its most important projects. Several other exchanges have not been so fortunate in 2019. Five notable exchanges have already had to shut their doors, although a few like to claim that they have only suspended operations until they can work out their financial problems by finding more investors or a willing acquiring candidate. These unfortunate crypto exchanges were Cryptopia, Liqui, Coinpulse, QuadrigaCX, and Gatecoin.

With even the larger companies in the crypto universe taking big hits, it appears that no one is immune to effects of Crypto Winter. Crypto related companies have obviously been holding on for dear life, hoping that better days were around the corner. Crypto valuations have firmed up in recent weeks, and many optimistic analysts are predicting that Crypto Winter has finally come to an end, but do the current survivors in Crypto-Land have the reserves to benefit from a turnaround in previous market conditions?

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Crypto Winter pain continues – Bithumb exchange to layoff 50% of staff

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