OpenSea has faced several issues this year, and the company just added another one to its list. Today, CEO Devin Finzer announced through Twitter that roughly 20% of the company’s staff would be laid off. Finzer cited an “unprecedented combination of crypto winter and broad macroeconomic instability” as factors for the staff reduction. He added that the OpenSea layoffs will help it operate for the next five years under “various crypto winter scenarios.”
Still, Finzer remains confident in his company. During the crypto downturn, he expects to see further innovations in the non-fungible token (NFT) industry. In addition, Finzer believes that the widespread layoffs are unique and won’t happen again. Ultimately, he believes that the crypto winter will provide opportunities to capture market share.
Today is a hard day for OpenSea, as we’re letting go of ~20% of our team. Here’s the note I shared with our team earlier this morning: pic.twitter.com/E5k6gIegH7
— Devin Finzer (dfinzer.eth) (@dfinzer) July 14, 2022
The layoffs come as Bitcoin (BTC-USD) has shed over 50% of its value year to date. Making matters worse, OpenSea is currently dealing with other internal problems. Let’s get into the details.
OpenSea Layoffs Hit 20% of Staff as Internal Troubles Brew
June was quite a rough month for OpenSea, as the company experienced several issues. First, OpenSea experienced a data breach in which customer info was given to an “unauthorized” third party. A senior engineer at Customer.io, an email vendor that works with OpenSea, provided the emails to the third party. The engineer has since been suspended and was reported to law enforcement. The scale of the breach seems to be significant, as OpenSea stated:
“If you have shared your email with OpenSea in the past, you should assume you were impacted.”
Meanwhile, former OpenSea Head of Product Nate Chastain was arrested last month. Law enforcement officials charged Chastain with wire fraud, money laundering and a scheme to commit insider trading. Chastain allegedly front-ran NFT collections that he knew would be featured on OpenSea’s homepage. Savvy NFT buyers eventually discovered the scheme after they observed his transactions on the Ethereum (ETH-USD) blockchain. OpenSea fired Chastain as soon as it heard that the allegations carried substance.
OpenSea stated that it has since implemented policies to prevent this type of behavior.
The NFT platform was last valued at $13.3 billion in a $300 million Series C funding round. However, the real valuation is likely to have dropped since then in light of the crypto winter.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
