ConsenSys, a blockchain software technology company founded by Joseph Lubin, is eyeing even further layoffs, a report from The Verge published on Thursday has revealed, citing unnamed sources at the company.
Towards the beginning of December, Finance Magnates reported that the company had laid off over 100 of its employees – roughly 10 percent of the Brooklyn-headquartered firm’s workforce. And now, it seems, that ConsenSys is gearing up for even more culling.
According to sources at the company, ConsenSys is spinning out startups which it previously supported, to streamline its business into “ConsenSys 2.0” which the company’s founder, crypto billionaire Joe Lubin announced earlier this month.
ConsenSys Labs, an internal incubator run by ConsenSys, houses a number of startups, referred to as “spokes.” According to an email sent by Shawn Cheng, a partner at Labs, it incubates around 36 spokes.
ConsenSys might lay off up to 60 percent of workforce
A source familiar with the spokes told The Verge that the teams at these so-called spokes range from 5 to as many as 50 employees. The source also speculates that the total number of employees that will be laid off could be as much as 50 to 60 percent of ConsenSys’ workforce, which consists of around 1,200 employees.
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A spokesperson for the company did not deny the allegations about the layoffs when contacted for comment. Instead, they told The Verge that they were speaking with every spoke and project to: “determine a path forward, whether that will be internally as a part of ConsenSys 2.0, or as an external entity.”
Many of the people working at these spokes are ConsenSys employees, and the majority of the companies have not yet created a revenue-viable product. According to one source, the mood at the company is bleak.
“The office is empty, people are only finding out who’s getting fired because you try to send Slack messages and they’re not there. ConsenSys won’t create a list [of the projects that are being spun out] or send out anything in writing because they’re afraid of everything going to the press,” they said.
The crypto bear market claims another victim
ConsenSys is the latest cryptocurrency-linked firm said to have run into financial trouble as cryptocurrency prices struggle to recover from a steep decline throughout 2018. This drop has also hurt the fortune of Lubin, who is credited as the Co-founder of Ethereum.
Lubin’s fortune was funding the startup, however, according to Forbes estimates, Lubin, who is one of the wealthiest men in the crypto space, has seen his fortune drop to less than $1 billion from $5 billion in early 2018. This was due to Ethereum’s drop in price, with the cryptocurrency’s value falling by around 93 percent from January.
As a result, Lubin has been open about looking for external funding for his company, with two sources stating that the company is actively looking for investment: “They’re using the 13 percent announcement I would imagine to give comfort to potential investors about the small-scale downsizing,” one source says.