Swyftx, a cryptocurrency exchange situated in Brisbane, Australia, has let off 90 employees, citing the repercussions from the bankruptcy of global exchange FTX and a significant decrease in worldwide activity as the reasons for the layoffs.
According to The Guardian’s report, Swyftx had no direct exposure to FTX. Regardless, co-founder and CEO Alex Harper told the staff in a message on Monday, Dec. 5, that the company was immune to the fallout in crypto markets.
Reportedly, it is gearing up for any further huge drops in trade volumes in the first half of 2023 and the possibilities for more “black swan-type events.”
There are presently 235 workers at the firm; therefore, the layoffs amount to almost 35% of the workforce.
The impacted employees will be notified through email for a one-on-one meeting next week. They will receive severance compensation and employee stock option plans covering their employment plus six months by the end of the following week.
While Harper said Swyftx was “uniquely well-positioned” to withstand a crisis similar to FTX’s, the crypto firm was not an autonomous entity from which the exchange drew its 630,000 Australian consumers. However, the size of the corporation, he noted, was a problem.
For operation and growth in the next year and beyond, their staff is bigger than they need to be, said Harper. He added that their team is growing too fast.
“We were genuinely hopeful in August that the revenue [modeling] we’d done would not require any further reduction in staff numbers, but the FTX situation has forced us to plan for a period of diminished trading activity.”
A number of Swftx employees, according to Harper, “are nursing a very strong sense of injustice” about FTX’s actions and their effect on the market.
“Cryptocurrency wasn’t the villain in this story; it was all too familiar human greed and indifference,” he said.
After FTX collapsed at the beginning of November, its Australian subsidiaries voluntarily entered administration with KordaMentha. There were around 30,000 Australian consumers that were due money or cryptocurrencies from the exchange.
FTX in Australia
While FTX was able to get an Australian financial services license (AFSL) by purchasing an existing licensee, it was temporarily revoked by the Australian Securities and Investment Commission (ASIC), The Guardian reported.
On Monday, Warren Day, the chief operating officer of ASIC, testified before a senate investigation.
Labor senator Deborah O’Neill questioned Day why ASIC did not evaluate FTX’s suitability to hold the license.
Day verified ASIC’s concerns that it lacked the authority to conduct pre-acquisition assessments of licensees to determine whether or not they were fit to operate.
According to him, ASIC has severely limited the issuance of licenses like FTX’s since 2014 and has only awarded a handful of new permits in that time.
The cost of acquiring such a license via a takeover, as FTX did in 2014, was roughly $150,000.
Day said that ASIC lacked the manpower to investigate every takeover, estimating that hundreds occurred annually.
Joseph Longo, the chair of ASIC, has said that consumers can only be protected to a certain extent from the “dark side” of cryptocurrency, regardless of what regulations are put in place.
He added that ASIC is currently operating within the constraints of its small staff and the existing regulatory framework.