Crypto.com’s CEO Kris Marszalek posted a thread on Twitter describing the company’s standing in the current market.
Marszalek said the company has to choose to downsize until the bull market returns to keep its focus on its roadmap.
That means making difficult and necessary decisions to ensure continued and sustainable growth for the long term by making targeted reductions of approximately 260 or 5% of our corporate workforce.
— Kris | Crypto.com (@kris) June 11, 2022
He also added that in addition to downsizing, the company will take additional precautions to protect itself from the current market.
Did Crypto.com spend too much too fast?
The financial struggles of crypto.com may not be related to the current bear market only. The community speculates that crypto.com is going through a rough financial patch because it spent too much on advertisements and naming rights while losing a considerable amount to a recent hack.
Crypto.com started its bravery campaign with the motto “Fortune Favors the Brave” in October 2021.
The second video came out in February 2022 as a 30-second-long Super Bowl commercial starring LeBron James. This advertisement reached nearly 100 million viewers while costing about $7 million just for putting it up during the Super Bowl commercials.
The company also released a third video, which went live in March, with Joel Embiid saying, “future favors the brave.”
In 2021, Crypto.com bought the naming rights of the Staples Center in Los Angeles for $700 million and re-named it “Crypto.com Arena.”
A Twitter user mentioned this spending and replied to Marszalek’s tweet, implying that it was too much of an expense:
700 million naming rights deal
=35 million per year
More than covers those 260 jobs.
And thats not even getting into all the other non-sensical marketing dollars you’ve spent.
— ElenDegenerate (@ElenDegenerate1) June 11, 2022
In addition to the Staples Center, crypto.com spent more than $400 million on six different sports deals last year.
Effects of the hack
In January 2022, crypto.com suffered a hack, and 483 of its users lost about $34 million.
The attackers took advantage of a two-factor authentication bug and stole $15 million worth of Ethereum, $19 million worth of Bitcoin, and $66,200 worth of other currencies.
A week after the hack, thousands of users reached out to crypto.com to complain about how they couldn’t log in to their accounts and asked for help.
In response, Marszalek tweeted:
“In 95/100 cases you are simply using the wrong email to login. We don’t allow duplicate accounts with the same phone number, so you will get stuck if you are using the wrong email,”
He also added:
“Rest assured your funds are safe and waiting for you to log back in.. with the right email.”
Third crypto exchange to downsize
The first crypto company that chose to downsize was Gemini when they announced they were letting 10% of their staff go to survive the winter. Its case was particularly attention capturing since it had never let its staff go since its foundation in 2014.
A few days after Gemini’s announcement, Coinbase also chose to un-hire new recruits and freeze the hiring process indefinitely to survive the current market. There were speculations regarding Coinbase’s financial status months before its downsizing announcement.