Apologies Won’t Keep Layoffs And Crypto Prices From Dropping

This is a weekly feature that will look back at the week that was in crypto, blockchain and Web3, and offer insights and analysis. Check out our previous column here.

Apologies, layoffs and crypto prices dominated this week as the FTX-induced contagion continued to spread across the industry.

Late last week, Sam Bankman-Fried’s apology tour began, with the former head of FTX saying he was sorry, but adding he was not aware of some of the accounting issues at the exchange — such as the $8 billion hole on the balance sheet — and blaming other companies for its downfall.

His apologies have not impressed everyone — or likely anyone.

Market effects

Of course, apologies are necessary because Bankman-Fried’s actions — or inactions (it really doesn’t matter which) — have caused real world harm. Not only have FTX’s customers perhaps lost all their investments, but even those outside of FTX are feeling the effects. One needs to go no further than looking at the layoffs in crypto through the last week.

Crypto exchanges Kraken, Bybit and Swyftx all announced they would be laying off 30% or more of their staff.

In a letter to employees, Swyftx’s CEO cited the possibility of more “black swan-type events” and trading volumes likely falling in the first half of 2023 as reasons for the cuts, according to Bloomberg.

Also this week, Boston-based Circle Internet Financial called off its proposed merger agreement with special-purpose acquisition company Concord Acquisition Corp. — ending a year-and-a-half long SPAC saga which would have valued the company at $9 billion.

It’s not too much of a leap to think Circle figured this may not be the best time for an issuer of stablecoin to hit the public markets.

To top everything off, this week also saw Standard Chartered issue a note outlining a scenario where Bitcoin could drop as low as $5,000.

That would be a 70% drop from around the $17,000 price point it has hovered around since the FTX debacle came to light — which was a drop from the $20,000 it was at in early November.

While others are much more bullish — even outlandishly so — it is not difficult to imagine a further drop in crypto prices, especially considering everything the industry has been through.

That could well spell more business changes at crypto firms and more layoffs — and of course more apologies from those who helped cause it all.

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Illustration: Dom Guzman