Good morning, and welcome to Protocol Fintech. This Tuesday: crypto winter isn’t actually gone, Do Kwon’s alleged proposal manipulation and HSBC’s move toward fintech.
Crypto Winter is definitely here
Crypto winter was a thing of the past, it seemed. Well, maybe not: The slump that began earlier this year just keeps getting worse for the fast-growing but increasingly controversial industry.
What was a $3 trillion market just a few months ago plunged sharply over the weekend, dipping below $1 trillion as crypto reeled from a broad market downturn. The crash triggered a halt in withdrawals at a major network, big layoffs and a fuzzy overall outlook for crypto.
“Due to extreme market conditions.” That was the reason crypto lender Celsius Network cited for a stunning announcement: It was pausing all withdrawals and transfers between accounts.
- The pause was necessary “to stabilize liquidity and operations while we take steps to preserve and protect assets,” Celsius said in a blog post. “We understand that this news is difficult.”
- The move rattled a crypto market still reeling from the UST stablecoin crash. Binance added to the uncertainty by announcing that a “stuck transaction causing a backlog” forced the crypto exchange to briefly pause bitcoin withdrawals.
- Bitcoin itself shed a huge chunk of its value, falling to about $23,000 from a high of $67,000 just seven months ago.
Crypto is shedding more jobs. The market crash has also meant an end to the crypto hiring binge.
- BlockFi announced it was reducing its workforce by 20%. “Today is a painful day for BlockFi,” co-founder Flori Marquez said on LinkedIn.
- Other crypto companies are sharing that pain: Crypto.com said it was cutting 5%. Gemini said it was slashing 10% of its staff. And Coinbase announced a hiring freeze and even rescinded some job offers before saying Tuesday it was cutting 18% of its workforce.
- “We’re just leaving behind a time for crazy, unrealistic valuations, crazy hiring trends and a lot of excess,” Cathy Yoon, chief legal officer at MPCH, told Protocol.
“Gravity is back with a vengeance,” Rob Siegel, a Stanford Graduate School of Business lecturer, said. Crypto got caught in “the perfect storm,” he told Protocol. And it may actually be a good thing for what remains a promising industry, Alex Johnson, author of the Fintech Takes newsletter, told Protocol: “Crypto winter is exactly what the space needs to wipe the slate clean.”
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On the money
HSBC Bank is training thousands of employees in fintech. In a course developed with the University of Oxford’s Saïd Business School, the bank is offering training to staff outside of its digital and technology teams in a bid to strengthen employees’ fintech knowledge.
Charles Schwab is paying $187 million in an SEC settlement. The SEC charged three Charles Schwab investment adviser subsidiaries for misleading clients of its robo-adviser product, Schwab Intelligent Portfolios, leading clients to take on risk for less money.
Goldman Sachs traded an ether derivative product for the first time. The investment banking giant executed its first trade of Ethereum non-deliverable forwards, a derivative that pays out in cash based on the price of ether.
A Bank of America report suggests that consumers are still into crypto. The survey found that consumer interest in crypto is still strong despite recent market conditions, with growing interest in using crypto as a payment method.
Jamaica recognized its CBDC as legal tender. The first in the world to do so, Jamaica’s move to recognize its CBDC, the Jamaica Digital Exchange, is aimed at improving financial situations for the country’s large unbanked population.
Overheard
An anonymous Twitter user known as FatManTerra, a member of the Terra Research Forum who has regularly criticized Terraform Labs for how the UST-luna collapse went down, is accusing Do Kwon of being behind a mystery wallet that voted for his own Terra relaunch proposal. “You’ll notice that every tiny thing they do is to extract more money out of the ‘community’ through wordplay and manipulation,” they tweeted.
While a number of crypto exchanges and companies have been hit hard and layoffs are now a common thing, Binance is saying that it’s actually fine. “We have a very healthy war chest; we in fact are expanding hiring right now,” CEO Changpeng Zhao said. According to Zhao, spending big on promotions like Super Bowl ads crippled other companies.
Your latest in the Ripple vs. SEC brawl: Ripple general counsel Stu Alderoty says the SEC “has deliberately muddied the regulatory waters for crypto,” and that there is a “need to finally clean up this regulatory sludge” to move forward in crypto’s potential.
Deal flow
Ohio-based insurtech Branch raised $147 million in a series C round, reaching unicorn status at a valuation of $1.05 billion. The company offers bundled home and auto insurance.
Indonesian crypto wallet and crypto trading platform Pintu raised $113 million in a series B round from Pantera Capital, Intudo Ventures, Lightspeed India Partners and Northstar Group. The company says it will be doubling its headcount, while many other crypto platforms are doing the opposite.
Canadian investing platform Delphia raised $60 million in a series A round led by Multicoin Capital. FTX Ventures, Lattice Ventures, Valor Equity Partners and Ribbit Capital also participated in the round.
New York-based crypto custody platform Entropy raised $25 million in seed funding. A16z crypto led the round, with participation from Coinbase Ventures, Ethereal Ventures and Dragonfly Capital. The company’s founder is a self-proclaimed “anti-capitalist anarchist” building a decentralized self-custody solution.
Summer, a New York startup focused on helping customers finance their second homes, raised $13.4 million in seed funding led by Lightspeed Venture Partners and QED Investors. The company was founded by prior Airbnb employees.
AffiniPay acquired MyCase for an undisclosed sum. Austin-based AffiniPay serves legal, accounting, construction, design and association professionals, while MyCase provides legal management software.
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