It’s no secret that the crypto sector has taken some significant hits lately. The collapse of prominent exchange platform FTX has plunged the entire field into turmoil as investors ponder a highly uncertain future. As the downfall of founder Sam Bankman-Fried became imminent, the leading platform had no choice but to file for Chapter 11 bankruptcy. And as it turned out, companies with ties to FTX or sister company Alameda Research are also struggling since the iconic collapse. Crypto trading platform BlockFi has announced that it may be facing bankruptcy as well. Reports indicate that before the company seeks Chapter 11, though, it is likely to resort to job cuts. If implemented, the BlockFi layoffs would cast an even darker shadow over crypto markets.
Let’s take a look at what traders and investors need to know.
The BlockFi Layoffs: What to Expect
Since BlockFi has confirmed its strong ties to FTX, speculation has been rising that the trading platform is on its way out. In a blog post yesterday, the company addressed the growing concern for its future, as well as the future of crypto. Per the post:
“There are a number of scenarios that may be available to us, and we are doing the work now to determine the best path forward. BlockFi has the necessary liquidity to explore all options and we have engaged expert outside advisors that are helping us navigate BlockFi’s next steps.”
Whenever a company is facing such an uncertain future, layoffs are always a distinct possibility. And given how much the crypto sector has struggled in 2022, it wouldn’t be surprising for platforms like BlockFi to start reducing staff. Bitcoinist reports that BlockFi and Coinbase (NASDAQ:COIN) have been among the most negatively impacted companies in the sector. According to a study cited by the outlet, the two companies have lost 28,000 jobs between them over the course of the year.
While the future is still uncertain, both layoffs a bankruptcy are distinct possibilities for BlockFi. The platform hasn’t issued any direct statements on the pending job cuts but that could change at any time. Investors should watch carefully for news on the BlockFi layoffs as the crypto contagion continues to spread.
On the date of publication, Samuel O’Brient 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.