Big funding rounds, layoffs and FTX developments

The past week saw an interesting set of big funding announcements, although the overall market sentiment remains bearish. Several companies announced job cuts as they struggled to stay afloat with the repercussions of FTX’s collapse and the so-called crypto winter. Speaking of FTX, its new creditors were revealed last week, and the company’s lawyers sought answers from disgraced founder Sam Bankman Fried’s immediate family.

Big funding rounds

Long-term investors continue to see value in the bear market. A number of companies announced significant funding rounds, including Blockstream and QuickNode.

QuickNode, a web3 infrastructure firm that provides blockchain development tools, raised $60 million in a Series B round and reached a valuation of $800 million. The lead investor was Dan Tapiero’s 10T Holdings and participants included Alexis Ohanian’s Seven Seven Six, Tiger Global, Protocol Labs and QED Investors.

Crypto infrastructure company Blockstream raised $125 million in convertible note and secured loan financing to expand its bitcoin mining hosting services. Kingsway Capital led the convertible note, with other investors including Fulgur Ventures.

Spatial Labs, a web3 infrastructure firm focused on improving metaverse and commerce, also raised a notable round — $10 million in seed funding. It was a rare slice of cash for a Black founder in the U.S., where only about 1% of venture capital funding went to startups with Black founders in 2022, according to Crunchbase data. Spatial Labs’ 25-year-old founder and CEO, Iddris Sandu, says he may be the first Black founder under 30 to raise a double-digit million seed round.

Layoffs continue

Several businesses announced job cuts last week as crypto continues to grapple with challenging market conditions.

Digital Currency Group (DCG)-owned crypto exchange Luno cut 35% of its workforce, citing the “incredibly tough year” affecting the crypto market. Luno reportedly had a total headcount of 960, meaning more than 330 jobs were lost. DCG has come under increasing pressure over the past year as the crypto downturn intensified amid a turbulent macroeconomic backdrop. The collapse of crypto hedge fund Three Arrows Capital in June and the failure of FTX in November exacerbated the firm’s underperformance.

Crypto exchange Gemini shed 10% of its staff in a third round since June. Gemini cut 10% of its workforce in June, followed by more layoffs the following month. As a result, its overall headcount slipped from 1,100 at the start of 2022 to about 700 people near the end of the year. Gemini halted client withdrawals for its Earn product in November as its lending partner, Genesis Global Capital (a DCG unit), paused withdrawals amid severe liquidity issues. Genesis filed for bankruptcy protection and owes more than $765 million to some 340,000 Gemini Earn customers.

Crypto services provider Matrixport, owned by billionaire entrepreneur Jihan Wu, cut 10% of its workforce, or about 30 employees. Matrixport had more than 290 employees.

Crypto tax unicorn CoinTracker cut about 20% of its staff, or 19 employees, citing market headwinds and “over-hiring.”

FTX developments

The FTX case continued to see developments after its bankruptcy protection filing in November. Last week, a new, extensive list of FTX’s creditors was revealed, which includes tech giants, athletes and governments. Amazon Web Services, Apple, Meta Platforms, Twitter, Netflix, Adobe, Tom Brady, U.S. state tax, consumer affairs, and attorneys general offices are all listed as FTX creditors.

FTX bankruptcy lawyers are seeking permission to subpoena former CEO Bankman-Fried, his family and top lieutenants at the collapsed crypto exchange, new court documents showed.

Lawyers are targeting Bankman-Fried’s parents, Joseph Bankman and Barbara Fried, and his brother, Gabriel Bankman-Fried, saying the trio acted as his advisers. They also named FTX co-founders Gary Wang and Nishad Singh, former Alameda Research CEO Caroline Ellison and Constance Wang, the former chief operating officer of FTX Trading Ltd. and co-CEO of FTX Digital Markets Ltd, in the documents. Lawyers are seeking information and documents regarding FTX’s assets and business operations and the personal assets of FTX insiders, among other things.

Lawyers for Bankman-Fried, on the other hand, argued that he should be allowed access to assets and crypto held by FTX, saying there’s no evidence he’s responsible for previous alleged unauthorized transactions.

“Nearly three weeks have passed since the initial pretrial conference and we assume that the Government’s investigation has confirmed what Mr. Bankman-Fried has said all along; namely, that he did not access and transfer these assets,” Bankman-Fried’s lawyer, Mark Cohen, said in a letter. “Given that the sole basis advanced for seeking that condition has not been supported, we believe that the bail condition imposed at the conference should be removed.”

Finally, the Justice Department asked a federal judge to bar Bankman-Fried from communicating with current and former employees of FTX without a lawyer present, after prosecutors alleged that he recently contacted a potential witness in his criminal case.

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.

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