The rich also cry: leading crypto giants bleed from the lasting crypto winter

Crypto winter has dragged on… The collapse of Celsius and 3AC may seem like nothing compared to the accumulating problems among crypto giants. We’ve already told you about the endless problems at leading US crypto exchange Coinbase, the funding issues of leading hardware crypto wallet Ledger, and so on. 

Today, let’s look at two more iconic examples of rapidly escalating troubles in the world of big crypto: let’s discuss Robinhood’s latest problems and the forced exit of the legendary Michael Saylor, CEO and founder of Microstrategy.

You too, Robinhood?

Robinhood, one of the leaders in the U.S. market (in trading both stocks and crypto), released three negative news at once yesterday (even Coinbase probably couldn’t do so). First, the company decided to release its quarterly report, which came out two days ahead of schedule, upsetting investors with a slow recovery.

Then Robinhood’s CEO said in a press release that it plans to lay off 23% of its employees. This will be the second wave of layoffs during the current crypto winter. The layoffs were the exchange’s reaction to a decline in both the number of deposits and the number of traders at the same time.

Falling profits and staff layoffs, an incomplete list of Robinhood’s problems. As the owner of Bitlicense, the exchange was recently subjected to an inspection by the New York City Department of Finance (NYDFS). Officials found violations of bank secrecy, money laundering regulations and other deficiencies in many areas. The company was able to reach a pre-trial settlement with the NYDFS in exchange for a $30 million penalty.

Microstrategy’s negative record

Microstrategy, one of the cult cryptocurrency companies, reported a record Q2 loss of $917.8 million, with almost no growth in revenue (compared to the first quarter).

The loss is entirely due to the negative revaluation of Bitcoin’s assets, which in 2020 brought Microstrategy worldwide fame as the first public company to directly purchase the cryptocurrency.

As a result, Michael Saylor, Microstrategy’s CEO and founder, has quit as CEO, which, like the recent sale of most bitcoins by Tesla, symbolically ends an era. Although Michael Saylor remains at the company in a lesser position and will continue to run the company’s cryptocurrency business, this is a severe blow to the company’s reputation as a leading visionary in the crypto market.

The short conclusion

Everything is bad. Both cases speak clearly about the serious problems of major crypto companies. As you can see, their safety margin is gradually running out, which leads to huge losses and staff reductions (which, of course, cannot happen indefinitely).

For now, the market is frozen in a somewhat fragile equilibrium, but don’t be fooled. As any further market decline can lead to unpredictable and serious effects for the crypto industry, it seems that market giants are working at the limit of their capabilities.