Cryptocurrency exchange Kraken said on Wednesday it would cut its global workforce by 30 percent, or about 1,100 employees, citing tough market conditions that have crippled demand for digital assets this year. Higher interest rates and worries of an economic downturn have roiled cryptocurrencies as investors fled risky assets, with recent bankruptcies adding to the uncertainty.
“Since the start of this year, macroeconomic and geopolitical factors have weighed on financial markets,” the company said.
Kraken said it has seen a drop in trading volumes and fewer client sign-ups, adding that the layoffs will take total headcount to where it was 12 months ago.
Earlier this month, crypto exchange Coinbase slashed jobs in its recruiting and institutional onboarding teams.
Kraken, which earlier slowed hiring and pulled back marketing spending, said it was forced to cut jobs as it had exhausted other measures to bring expenses in line with current demand.
Meanwhile, the implosion of crypto exchange FTX, the highest-profile casualty of the year’s market turmoil, continues to ripple across the industry, with BlockFi filing for bankruptcy earlier this week.
The meltdown has dragged the price of the largest cryptocurrency, Bitcoin, to around a two-year low.
Global regulators have since been circling crypto firms with many seeking to set tough rules to govern the largely unregulated sector.
On Monday, the US Treasury Department’s Office of Foreign Assets Control said that Kraken had agreed to pay a fine to settle civil liability related to apparent violations of sanctions on Iran.
As part of the settlement with OFAC, Kraken will pay about $362,000 (roughly Rs. 3 crore), and “invest an additional $100,000 (roughly Rs. 81,18,000) in certain sanctions compliance controls.”
According to the OFAC statement, Kraken’s platform processed 826 transactions for users located in Iran between roughly October 2015 to June 2019.
At the time, Kraken maintained controls intended to prevent users from initially opening an account while in a jurisdiction subject to sanctions, but did not implement IP address blocking based on geolocation across its platform, the statement added.
In October, the Treasury Department had also fined crypto exchange Bittrex Inc $29 million (roughly Rs. 235 crore) in fines for “apparent violations” of sanctions on certain countries and anti-money laundering law.
© Thomson Reuters 2022