Cryptocurrencies | Robinhood lays off over 750 employees due to a declining market

(San Francisco) US-based online brokerage platform Robinhood is set to lay off 23% of its workforce, or more than 750 employees, as interest in the stock market and cryptocurrencies has largely waned after booming during the pandemic.

Updated yesterday at 7:21pm.

“Last year we recruited on the assumption that the appetite for stock markets and cryptocurrencies observed during the COVID-19 era would continue in 2022,” CEO Vlad Tenev explained in a letter to employees published on the company’s blog.

The California-based company had already laid off about 9% of its workforce at the end of April after an 8% drop in active users between the third and fourth quarters of 2021. It also said it would focus on cost control.

“That wasn’t enough,” notes Vlad Tenev in his letter to the “Robinhoodies” (the “Robinhoodiens,” a play on words between Robin des Bois and Hooded Pullover).

“Since then, we have seen the macroeconomic environment deteriorate even further, with inflation at its highest level in 40 years, accompanied by a crypto market meltdown,” he explains. “This has further reduced our customer base and assets under our control. »

The platform, which went public a year ago, retains around 2,600 employees after laying off about 1,100 people in total.

This second wave of layoffs affects all trades, but above all operations and marketing, said the boss.

According to its quarterly results released on Tuesday, the service had about 15 million monthly active users at the end of June, down 28% from a year ago. Sales plummeted 44% within a year.

In light of the cryptocurrency crisis, several investment platforms specializing in these volatile currencies have recently filed for bankruptcy.

And more generally, given the unfavorable economic environment, many technology companies have slowed the pace of hiring or firing.

Shopify, an online selling platform, announced last week that it is laying off 10% of its employees, or around 1,000 employees, because the massive adoption of e-commerce during the lockdown hasn’t resulted in a change in habits as quickly as it had hoped would have .

$30 million fine

Although short, Robinhood’s history has already been marked by several controversies.

Its founders have reiterated that they want to “democratize access to finance,” but their economic model is worrying, given that the platform funds the lack of commissions by subcontracting their large volumes of work to intermediaries who remunerate them. A legal practice, but opaque and potentially a source of conflicts of interest.

On Monday, a New York City financial services regulator fined its cryptocurrency business $30 million for violating money laundering and cybersecurity laws.

“We have made significant progress in establishing cybersecurity and compliance programs, and we will continue to make this work a priority on behalf of our clients,” responded Cheryl Crumpton, a Robinhood attorney contacted by AFP.

“We continue to pride ourselves on offering a more accessible and cheaper platform to buy and sell crypto,” she added.

Robinhood rose to global prominence in January 2021 during the GameStop saga, in which thousands of small shareholders drove the shares of this chain of video game stores from $17 to nearly $500 in a matter of days.

Unable to keep up with the flow of orders, Robinhood had to block certain transactions at the risk of imploding itself, drawing the ire of many stockbrokers.

The company’s stock has lost half of its value since the beginning of the year.

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