A month ago, BlockFi became one of the several companies that were reducing its workforce, as it announced letting go of 20% of its staff. This was because of the downturn in the crypto market. A couple of weeks ago, the company announced that it had signed an agreement with crypto exchange FTX. This included a loan worth $400 million and terms and conditions for a potential acquisition. But, things seem to be getting worse for the crypto lender.
This is because an employee of the company disclosed that it is now offering 10 weeks of continued health insurance, which is referred to as COBRA i.e. the Consolidated Omnibus Budget Reconciliation Act, as well as 10 weeks paid offs, as long as they are willing to resign.
The source disclosed that if the employees are ready to accept the buyout offer, they would also become eligible for unemployment. BlockFi also confirmed that it had indeed been making buyout offers to its staff. A spokesperson for the company said that they had decided to launch a voluntary separation program in light of the current environment of the market.
They said that their goal was to right-size the company and it was not something they had taken lightly. Plus, they also want to ensure that employees are able to make the right decision and have enough resources to do so.
All is well
Since he signed the deal with the FTX crypto exchange of Sam Bankman-Fried, Zac Prince, the founder and chief executive of BlockFi, has insisted that all is well with the company. As a matter of fact, the CEO said last week that the company should not be compared with its competitors, as a number of them have filed for bankruptcy.
It is a fact that crypto lending companies have been struggling in the last month or two, with Voyager Digital and Celsius Network both filing for bankruptcy because of a liquidity crisis. Prince stated that BlockFi had hiked its interest rates in July and further said that they were also working on some exciting things.
The Wall Street Journal had posted that the world of decentralized finance (DeFi) appeared to be suffering from an existential problem. This pushed the CEO of Pantera Capital, Dan Morehead to say that BlockFi was actually a centralized company. Prince stated that Celsius Network, as well as the Lehman Brothers, were insolvent, but his company is not in the same category.
Prince had a very different tone last month when they announced the layoffs. It disclosed that they were reducing its workforce by 20%, which means its headcount would now be 680 instead of 850.
The CEO had also added that they were working on reducing spending on vendors and marketing and had also cut back on executive spending. They were also slowing down their hiring because the shift in the macroeconomic conditions was taking a toll on the company. Therefore, he said that their goal was to achieve profitability.