Cryptocurrencies | Robinhood is laying off over 750 people due to a declining market

(San Francisco) US online brokerage platform Robinhood will lay off 23% of its staff, or more than 750 people, as interest in the stock market and cryptocurrencies has largely diminished since the boom seen during the pandemic.

Posted at 19:00
Updated at 19:21

“Last year we recruited on the assumption that the appetite for the stock market and cryptocurrencies observed in the COVID-19 era would continue into 2022,” boss Vlad Tenev explained in a letter to employees posted on Dell’s blog. ‘agency.

The Californian company had already laid off about 9% of its workforce in late April, after seeing the number of active users drop 8% between the third and fourth quarters of 2021. It also indicated that it would focus on cost control.

“It was not enough”, observes Vlad Tenev in his letter addressed to the “Robinhoodies” (the “Robinhoodiens”, pun between Robin des Bois and sweatshirt).

“Since then, we have seen the macroeconomic environment deteriorate even more, with inflation at the highest level of the last 40 years, accompanied by a collapse in the cryptocurrency market,” he explains. “This has further reduced our customer base and the resources under our control. ”

The platform, which went public a year ago, retains around 2,600 employees, after having fired around 1,100 people in all.

This second wave of layoffs will affect all trades, but primarily operations and marketing, the boss said.

According to Tuesday’s quarterly earnings release, the service had around 15 million monthly active users at the end of June, down 28 percent from a year ago. Its turnover dropped 44% in one year.

Faced with the cryptocurrency crisis, several investment platforms specializing in these volatile currencies have recently filed for bankruptcy.

And, more generally, many technology companies have slowed the pace of hiring or laid off staff in the face of the unfavorable economic environment.

Shopify, an online retail platform, announced last week that it would lay off 10% of its employees, or roughly 1,000 people, because the massive adoption of e-commerce during the lockdown didn’t translate into such a change in habits. as fast as he hoped.

$ 30 million fine

Although short, the history of Robinhood 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, because the platform funds the absence of commissions by subcontracting its large volumes of orders to the intermediaries who pay it. A legal practice, but opaque and potentially a source of conflict of interest.

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

“We have made significant progress in creating cybersecurity and legal compliance programs and will continue to make this work a priority in the interest of our clients,” reacted Cheryl Crumpton, a Robinhood attorney contacted by AFP.

“We remain proud to provide a more accessible and affordable platform for buying and selling cryptocurrencies,” he added.

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

Unable to manage the flow of orders, Robinhood had to block some transactions, risking to implode, causing the ire of many stockbrokers.

The company’s shares have lost half of their value since the beginning of the year.

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