Following Bitbuy acquisition, WonderFi has reduced staff by at least 15 to 20 percent.
The cryptocurrency market has been getting crushed in recent months, amid what has also been a tough period for tech firms more broadly.
Vancouver-based crypto company WonderFi hosted a corporate update call today laying out how the current environment has impacted the company and the steps WonderFi has taken to survive the market downturn and crypto crash.
Company executives also laid out why they believe some of the recent activity in the unregulated crypto space—including with Terra and Celsius—could benefit WonderFi in the long-run.
WonderFi believes some of the recent activity in the unregulated crypto space could benefit the firm in the long-run.
“A lot of the dependencies and risk exposure that some of the platforms and assets that you’re seeing in the news getting taken down [have] … are again, really further validating our thesis around compliant crypto, doing crypto right,” said WonderFi co-founder and CEO Ben Samaroo.
WonderFi, which trades on the Neo Exchange as ‘WNDR,’ is trying to build a “compliant crypto ecosystem” spanning crypto trading, DeFi, and NFTs and gaming. It is so far doing this with the help of subsidiary Bitbuy, and Coinberry, which it is currently in the process of acquiring. Bitbuy and Coinberry are both licensed Canadian crypto platforms.
Beyond crypto, rising inflation, interest rates, and geopolitical tensions have led to a broader public tech stock rout, which has hit publicly-traded companies like Shopify and spread to privately-held firms like Wealthsimple, negatively impacting valuations and making it tougher to raise capital. WonderFi’s stock price has fallen more than 82 percent over the past six months, and is currently trading at $0.30 USD per share at time of publication.
Despite this, Samaroo claims the company is “well-prepared” for these conditions, citing the strength of WonderFi’s balance sheet due to some “timely capital raises” and its cash reserves.
Since WonderFi closed its acquisition of Toronto-based crypto trading platform Bitbuy in March, Samaroo said WonderFi has also reduced its staff across the two businesses “by between 15 and 20 percent.” The company claimed this was in an effort to cut costs and deliver shared services across compliance, customer service, product engineering, and executive functions.
Approximately 95 Bitbuy employees joined WonderFi’s 25-person team as part of the acquisition deal, putting the company’s headcount at 125. Samaroo did not share how many people in total were impacted by these layoffs.
RELATED: WonderFi clears regulatory hurdles, set to close acquisition of registered crypto marketplace Bitbuy
According to Samaroo, some of these staff cuts were in the works prior to the market downturn. He added that WonderFi also made some “further reductions” to its team, but did not specify what those reductions were. Samaroo said the company made these moves in light of present market conditions to keep its costs in check, as WonderFi works towards “ensuring all business lines remain cash-neutral or better throughout this down market.”
WonderFi is far from the only tech company to lay off staff amid this environment—joining companies like fellow Vancouver-based software firm Thinkific and San Francisco crypto giant Coinbase—in an effort to preserve cash in preparation for what could be a prolonged downturn.
According to Bitbuy CEO Michael Arbus, the company has seen declines across the board since the beginning of April, following the release of WonderFi’s fiscal Q2 results.
Arbus said that during this time, Bitbuy has seen a sharp drop in cryptocurrency prices, trading activity, and volatility—where the company makes its money. “A lot of this activity … coincided with a sharp decline in equity markets, and in particular, for higher risk assets, like tech, FinTech, and digital assets,” he said.
The Bitbuy CEO acknowledged that “the overall crypto market has seen its challenges” recently, adding that the market capitalization of global cryptocurrencies has fallen from about $2.26 trillion to $986 billion as of yesterday—a 56 percent decline over the past two and a half months.
RELATED: WonderFi to acquire Coinberry for $38.5 million in all-stock deal as Canada’s crypto space continues to consolidate
Some of this decline has been fuelled by the recent death spiral of algorithmic stablecoin Terra and the freeze of all withdrawals and transfers through unregulated, CDPQ-backed American crypto exchange Celsius amid “extreme market conditions.”
Despite tough market conditions and the company’s recent layoffs, Samaroo believes that over time, WonderFi’s “compliant crypto” approach will help set the company apart and help it win amid a crowded market. The WonderFi CEO also predicts that the collapse of other unregulated crypto platforms will create additional space for a regulated entity like WonderFi.
“We expect that to be beneficial as these types of platforms get weeded out and that’ll help to make more room for what we’re building and focused on,” said Samaroo.
WonderFi’s backers include celebrity investor Kevin O’Leary of Dragons’ Den and Shark Tank Fame, who has bought into this vision of “compliant crypto.”
According to O’Leary, “in the case of WonderFi, you’re buying the picks and shovels, you’re buying the infrastructure, you’re buying the long-term vision, regardless of what pricing occurs on what coin.” He speculated that over time, as clients of banks begin to demand access to crypto, traditional financial institutions will gravitate towards compliant platforms.
“I think the opportunity for investors, those that can stomach the volatility, is extraordinary,” said O’Leary.
Feature image courtesy WonderFi.