The cryptocurrency winter continues to wreak havoc. Bitcoin services firm New York Digital Investment Group (NYDIG) is losing more than a third of its workforce. Citing a change of strategy and a reduction in spending, he had already recently carried out a reshuffle of his executive.
Massive layoff from NYDIG
NYDIG would have done it fired more than one hundred employees according to Wall Street newspaper, citing expert sources on the subject. Corresponds to 33% of its total workforcethe ax would fall just at the moment of the change of direction, former CEO Robert Gutman and president Yan ZHAO would be replaced by Tejas Shah and Nate Conrad respectively.
NYDIG is the digital asset subsidiary of Stone Ridge Holdings, an alternative asset manager. Since 2017, it has been offering financial services and tailor-made solutions to allow institutional investors to access Bitcoin.
Valued at $ 7 billion after its fundraising at the end of 2021, intended to further develop its offer. Only in the meantime, the market has sent the price of Bitcoin to the cellar with a drop of over 70%, which apparently revises its declared ambitions.
Except that the company just a week ago seemed to be casting a spell. In fact, through a document filed with the SEC, we learned about it The NYDIG reportedly raises an additional $ 720 million. Even more, she announced via a press release record results with revenues up 130% in the second quarter and a bitcoin balance up 100% compared to the year 2021with parent company Stone Ridge which owns it 10,889 BTC according to the latest available data. Betting on equally satisfying (not yet released) results for Q3, he particularly praised its rigorous management and the fact that, unlike so many others, it hasn’t succumbed to the sirens of DeFi and centralized platform lending.
A strategic mistake?
Maybe but it seems to have gotten carried away prematurely to offer a range of services dedicated to banks with its famous “Bitcoin For All” campaign. Robert Gutman, the former CEO and co-founder of Stone Ridge, who has reinstated once again, had taken it seriously in January 2021.
However, if at the time the US regulatory environment seemed favorable with, in addition, a positive dynamics of the cryptocurrency market, The NYDIG allegedly errs on optimism by going out of its way to connect with banks and credit unions as evidenced by a former employee quoted by Coindesk.
The NYDIG put all its eggs into this banking strategy, but realized the banks weren’t ready. They spent all that money telling a story that they would bring bitcoin to the masses. Their basic strategy was messed up.
Done, the history of banks and cryptocurrencies is not quite the promised land due to the concern of regulators who instead try to curb the momentum of institutions. Therefore, the Basel Committee on Banking Supervision is positioned at the forefront to very drastically oversee their foray into this new asset class. Added to clear regulations still pending, banking institutions, which have to meet very strict standards, are still very cautious and have not represented the windfall provided by the NYDIG.
The company has since turned to accelerating investments in its Bitcoin mining franchise, Mining Solutions, at the service of North American miners and continues to proclaim that the company’s balance sheet is “the strongest it has ever been”. We want to believe you, despite the approximately 110 laid-off employees that you have been careful not to mention.
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