Online broker Robinhood will cut its headcount by about 23% amid a deteriorating macroeconomic environment and negative developments in the cryptocurrency market. This, is stated in a letter from Robinhood CEO Vlad Tenev.
“In these new conditions we are operating with more staff than is necessary. As CEO, I approved and took responsibility for our ambitious staffing trajectory,” said Robinhood’s chief executive.
According to him, the layoffs will affect staff across all divisions. The Financial Times reports that about 780 people will be left without work.
Tenev also announced adjustments to the broker’s organizational structure. The changes are intended to “flatten the hierarchy” and remove “redundant roles and positions”.
“Those departing will be offered the opportunity to stay at Robinhood until October 1, 2022, and to continue receiving their usual pay and benefits,” the letter states.
The company’s chief executive pledged severance pay, continued payment of insurance contributions, and assistance in finding new employment for those affected.
On August 2, Robinhood published its second-quarter financial results, which show monthly active users declined by 1.9 million to 14 million. Operating expenses were down 12%, to $610 million.
Net income stood at $318 million — up 6% from the first quarter. However, compared with April–June 2021, the figure was down 44%. Loss per share was $0.34.
“While the decision to further cut staff was difficult, we believe it is the right move and will enable us to fulfil the mission of democratising finance,” said Tenev.
Shares of the online broker closed the trading session on August 2 up 2.1% at $9.23. After-hours quotes slipped to $9.17.
In April Robinhood laid off 9% of staff amid a 75% tumble in its shares after going public.
As a result of the crisis, many players in the cryptocurrency industry announced staffing reductions. In particular, BitMEX, Bitso, Mercado Bitcoin, Coinbase, BlockFi, and Crypto.com have taken similar steps.
In July, media reports spoke of a second wave of layoffs at the Bitcoin exchange Gemini. The decision to trim headcount was taken at Bitpanda, the mining company Compass Mining and the NFT marketplace OpenSea.
In August, the New York State Department of Financial Services fined Robinhood’s cryptocurrency unit $30 million for AML violations and cybersecurity policy breaches.
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