The crypto derivatives trading platform Paradigm, through a recent announcement, reduced employee compensation by 15% across the board. The OTC business, which is distinct from the cryptocurrency investment firm of the same name, attributed the salary cut to contagion following the collapse of cryptocurrency exchange FTX in a tweet.
Salary reductions, according to Paradigm, lower the need for layoffs witnessed across the ecosystem and will have a less significant effect on the organization’s momentum. The statement continued, that these were challenging times, but they had no choice but to do the difficult thing and maintain the financial flexibility to navigate the uncertain circumstances they found themselves in as an industry.
What could have caused this?
In light of recent findings and activities involving FTX, Alameda Research, and Sam Bankman-Fried which lead to a series of investigations, the co-founder of asset management company Paradigm a while back expressed “great remorse” for having invested in the company.
The co-founder and managing partner of Paradigm Matt Huang stated on Twitter on November 15 that the company is “shocked” by the information regarding the two firms and their founder. This may have been the root course of the cut-offs as most of the investments in the firms were written down to zero which put them in this situation.
According to data from April, the firm’s assets under control amounted to around $13.2 billion. The firm’s website mentions FTX and FTX.US as part of its portfolio at the moment. According to reports, its investment in the firm was around $278 million. FTX Token FTT, Serum Token (SRM), Maps.ME Token (MAPS), and the Oxygen Protocol Token, among others, are all tokens that were lost to the exchange.
Employee layoffs on the rise
The broader cryptocurrency industry has been severely impacted by layoffs recently. Plaid, a fintech company, let go of about 260 workers in December. As it struggles with the weakening economy, Plaid let go of roughly 260 staff. The corporation said that the plain fact was that their rate of cost increase exceeded their rate of revenue growth as a result of those macroeconomic developments.
Because of the present economic recession, however, the revenue increase did not materialize as rapidly as anticipated, therefore he decided to recruit and invest before sales growth. In a round co-led by Alameda Research, the trading company at the center of Sam Bankman-Fried’s empire collapse, Paradigm received $35 million in December 2021. Kraken, a cryptocurrency exchange, also cut 1,100 jobs last month or 30% of its employees.
Source: https://crypto.news/paradigm-slashes-employees-salaries-by-15/