> Since the start of this year, macroeconomic and geopolitical factors have weighed on financial markets.
This is an incredible couching of the last 9 months of cryptocurrency market behavior. Does anybody actually operate on their belief that "geopolitical factors," rather than astonishing amounts of fraud, are responsible for the current downturn?
We learned about the fraud because of macroeconomic factors!
inflation -> rising interest rates -> crypto less attractive [0] -> people ask for their deposits back -> company can't meet obligations -> company folds -> scrutiny -> fraud revealed
Is my basic model of things.
[0] from https://marginalrevolution.com/marginalrevolution/2022/11/th...: "When interest rates are very low a dollar in the far future is worth almost as much as a dollar today. Thus, in a regime of low interest-rates, crypto and other projects with (speculative) long-run payoffs could be valued highly. As interest rates rose, however, long-run speculative returns began to look much less attractive than say T-bills and money flocked out of assets in the long-run sector causing prices to plummet."
For the life of me I cannot understand how every single layoff notice talks about "macroeconomic factors."
Inflation and interest rates are up - okay. But real GDP growth (in the US at least) has been positive. Why is everybody acting like unemployment is at 8%, GDP growth is sharply negative, and consumer spending is way down?
At least with crypto stuff it makes sense that these companies are losing shitloads of money but with so many companies it seems to be "we expect to be making less money next year so we are cutting staff now."
In fairness, Kraken is regulated and I suspect can't be involved in any of the crypto scams. I'd imagine they really hold deposits as they should etc.
So for them it's the fact that markets are down and people aren't punting crypto, rather than "we took the USD deposits, turned them into shit coins and we're insolvent" kind of thing.
As a side note, I really like the framing of "operate on their belief"
> Does anybody actually operate on their belief that "geopolitical factors," rather than astonishing amounts of fraud, are responsible for the current downturn?
What people believe is such a slippery question, especially when those people are participating in or proximate to fraud. It might even be a category error. But pivoting to "operate on" moves the discussion from something unknowable to looking at observable behavior. It's along the lines of "Don't tell me what you value. Show me your budget, and I'll tell you what you value," in that it can skip over whole swathes of PR and other BS.
Macro weighs more on crypto than geopolitics or fraud. Fraud never deterred millions from dumping savings, reputations and careers into this mess. The inflection point, for crypto, as with other risk assets, was the Fed.
The fraud seems to get political very quickly with FTX. Sam Bankman donated enormous amounts of money to democrats. He was the second biggest donor behind George Soros. He said he also donated an equivalent amount to establishment republicans via dark money channels.
Sam Bankman was clearly a smooth political operator.You don't have meeting with Gary Gensler the head of the SEC otherwise.
I do. Crypto obviously has a big fraud problem which has infected most if not all of the ecosystem, but I don't think that's the actual reason for the downturn. Crypto has always had a fraud problem and it hasn't scared people and gullible suckers away before. I think outside factors are what drives the speculation.
My understanding is the crypto prices are driven primarily by the amount of liquidity injected in the market. Or, at least, that’s the case in the current cycle. Fraud is bad, but it has less impact.
Russia's invasion of Ukraine had a very strong impact on investor willingness. It indicated a new period of uncertainty where people preferred having their cash in stable vehicles.
I've seen startups struggle to raise in March when less attractive competitors raised with ease in February.
Crypto simply followed the overall market effects. People cashed out with the economic downturn on the profits they made, just as they did the stock market.
It's almost like the fundamental basis of crypto is fraud. Like they're not actually selling anything, besides "british south sea company" ~~stock shares~~ coins.
Every tulip bubble is full of fraud. Those markets are chalk full of people looking to get rich quick, and many people looking to get rich quick are willing to do it in a less than scrupulous way.
At least they're handling it responsibly and generously:
From their blog:
Separation pay: We will pay 16 weeks of base pay for all departing Krakenites inclusive of the paid leave period.
Performance bonus: For those eligible, we will pay each departing Krakenite their bonus as determined by their manager.
Benefits: We will offer eligible Krakenites 4 months of healthcare continuation coverage inclusive of the paid leave period. All Krakenites will continue to have access to counseling services during this period.
Extension of exercise window: We will extend departing Krakenites’ window to exercise their vested stock options.
Immigration support: Kraken will provide dedicated visa and immigration support for those currently on company-sponsored visas.
Outplacement support: We will provide career support for departing Krakenites, including networking opportunities, job search best practices, interview guidance, and more.
Any news on what the other side of the deal is? When I was laid of from Twitter in 2017, all of the benefits were contingent on signing a long document that included a non-disparagement clause.
Don't they realize they are supposed to create a KRY currency and pump it up to supply value to their company and pay their employees? Perhaps if the CEO had gone to Stanford, he would have been better educated in effective altruism and have placed their needs higher.
I feel like HN should just auto add a comment that says "Why does <company X> need <n> employees?" with a follow up comment that explains how large corporations work. It literally comes up in every single layoff announcement or other discussion of company size in some way, and the follow on comments are essentially the same every single time.
I'm not saying that a lot of these companies aren't overstaffed (indeed, that's why they are having layoffs!) but these questions always come across as pretty naive in the same way I hear "It's just a website! I could build that in a weekend"-type comments.
I don't know if you are genuinely curious but this question is getting kind of old. Every time a company does layoffs, somebody asks, "why does an X company need X number of people?". Every opening has a purpose. No company hires people for fun, and unless you are a company employee you don't know all the different areas, projects, and support staff a company needs to run when they are actually a business trying to make money.
I would assume most of the 1.1k people is support. You have timezones, hundreds of thousands of customers (if not millions). Kraken has one of the best support I encountered. But with less people buying/selling (as with Amazon: Less buying stuff, less using etc), companies are laying off Marketing, Customer Support, maybe Recruiters and HR. Maybe stopped side projects. I would not expect they shrink their engineering by much.
Is it naive of me to think that CEOs aren't really much better macro predictors than most of us and are kind of doing this in a wave like fad "because that's what everyone else is doing"?
One of the really startling things for me the first time we deposited a big VC check was how compelling the experience is. Printing out an ATM receipt with 7 figures on it was very memorable. We had to remind ourselves that however much it felt like success, it didn't mean shit in terms of our real goals.
I think that's much harder for people who are in that situation with less life experience and little or no experience building actual businesses. Coaching at entrepreneur events, I discovered there are a lot of people whose goal is to "be the next Mark Zuckerberg" (or whoever) or who wanted to found a unicorn. Who were thinking about it as a life stage, as in "I'm not sure if I'll found a startup or go to grad school".
And I suspect that's even more true lately with the vast amounts of VC money sloshing around. It must be quite easy to pay more attention to your investors and your YC cohort and the tech press than the grubby realities of commerce.
It makes sense; if your competitors are hiring, you need to hire in order to keep up and so you don't get out-executed. If they're firing, then maybe you don't need to "keep up with the Jones" as much.
I'm so glad I turned down the job offer at Kraken. The reason I turned it down was because I felt that crypto was a bubble waiting to pop (back in March, but that's been my "wrong" opinion for the last 5 years or more.) The tech stack was nice, the pay was excellent, the product I would have been working on is comparable to Bloomberg Terminal, so it was pretty cool too. But I just thought the job might go away in the near future.
If you have your crypto on Kraken, or ANY exchange for that matter, migrate your funds to cold storage self custody NOW. Figure it out, back up your keys on paper, it's not that hard.
All these layoffs make me a bit nervous to be graduating next week. There are still countless positions posted though so I'm still fairly optimistic about entering the job market.
For a company built on a Ponzi-scheme (crypto) they sure are being good to their employees and that’s laudable.
“Separation pay: We will pay 16 weeks of base pay for all departing Krakenites inclusive of the paid leave period.
Performance bonus: For those eligible, we will pay each departing Krakenite their bonus as determined by their manager.
Benefits: We will offer eligible Krakenites 4 months of healthcare continuation coverage inclusive of the paid leave period.
All Krakenites will continue to have access to counseling services during this period.
Extension of exercise window: We will extend departing Krakenites’ window to exercise their vested stock options.
Immigration support: Kraken will provide dedicated visa and immigration support for those currently on company-sponsored visas.
Outplacement support: We will provide career support for departing Krakenites, including networking opportunities, job search best practices, interview guidance, and more.”
I received a message from a recruiter there last week. I mentioned that I wasn't interested because of the crypto market right now. Her response was basically to say "just found out the position is no longer being filled", which I'm assuming is because of the impending layoffs. Then this week I see they laid off 30% of their staff. It's crazy to think that they hadn't stopped hiring long before they decided to cut 1,000+ jobs.
This wasn't just a cut to sales or support staff. 30% of engineering was layed off. I would say QA/QE was decimated, but I'm not sure if anyone was left.
What's even more flabbergasting is that this only brings them back to the same headcount they had 12 months ago. This is true of almost all the mass layoffs we've seen (twitter excepted). Companies were on a ridiculous binge over the last year. Every time this comes up people explain it as predictions based on the effects of the pandemic, but I don't buy it. This was like a mass delusion.
End of the year is generally when decisions are made regarding the next year, the whole "but it's Christmas and snowy.." is cute but companies only step back from doing it if they perceive the backlash to be too big and the sentiment is not the same all over the World.
> Since the start of this year, macroeconomic and geopolitical factors have weighed on financial markets.
Am I the only one who finds it ironic that they blame geopolitical factors affecting what was shilled as a safe heaven from governments and geopolitical games?
Kraken regularly used shell/cover companies to hire employees. They have a pretty complex web of fronts not-called-Kraken. Entire offices are 'employed' by one of these companies.
woodruffw|3 years ago
This is an incredible couching of the last 9 months of cryptocurrency market behavior. Does anybody actually operate on their belief that "geopolitical factors," rather than astonishing amounts of fraud, are responsible for the current downturn?
setgree|3 years ago
inflation -> rising interest rates -> crypto less attractive [0] -> people ask for their deposits back -> company can't meet obligations -> company folds -> scrutiny -> fraud revealed
Is my basic model of things.
[0] from https://marginalrevolution.com/marginalrevolution/2022/11/th...: "When interest rates are very low a dollar in the far future is worth almost as much as a dollar today. Thus, in a regime of low interest-rates, crypto and other projects with (speculative) long-run payoffs could be valued highly. As interest rates rose, however, long-run speculative returns began to look much less attractive than say T-bills and money flocked out of assets in the long-run sector causing prices to plummet."
UncleMeat|3 years ago
Inflation and interest rates are up - okay. But real GDP growth (in the US at least) has been positive. Why is everybody acting like unemployment is at 8%, GDP growth is sharply negative, and consumer spending is way down?
At least with crypto stuff it makes sense that these companies are losing shitloads of money but with so many companies it seems to be "we expect to be making less money next year so we are cutting staff now."
masklinn|3 years ago
rich_sasha|3 years ago
So for them it's the fact that markets are down and people aren't punting crypto, rather than "we took the USD deposits, turned them into shit coins and we're insolvent" kind of thing.
I think.
wpietri|3 years ago
> Does anybody actually operate on their belief that "geopolitical factors," rather than astonishing amounts of fraud, are responsible for the current downturn?
What people believe is such a slippery question, especially when those people are participating in or proximate to fraud. It might even be a category error. But pivoting to "operate on" moves the discussion from something unknowable to looking at observable behavior. It's along the lines of "Don't tell me what you value. Show me your budget, and I'll tell you what you value," in that it can skip over whole swathes of PR and other BS.
I love this and I'm borrowing it for sure.
JumpCrisscross|3 years ago
Macro weighs more on crypto than geopolitics or fraud. Fraud never deterred millions from dumping savings, reputations and careers into this mess. The inflection point, for crypto, as with other risk assets, was the Fed.
stuckinhell|3 years ago
Sam Bankman was clearly a smooth political operator.You don't have meeting with Gary Gensler the head of the SEC otherwise.
Kiro|3 years ago
programmarchy|3 years ago
g42gregory|3 years ago
cwkoss|3 years ago
Bitcoin is down 63% vs 9 months ago
Just sayin
HDThoreaun|3 years ago
norswap|3 years ago
SkyPuncher|3 years ago
I've seen startups struggle to raise in March when less attractive competitors raised with ease in February.
rabuse|3 years ago
Jetrel|3 years ago
tiahura|3 years ago
The vast majority of crypto advocates are true believers.
pokstad|3 years ago
importantbrian|3 years ago
hoffs|3 years ago
throw8383833jj|3 years ago
pb7|3 years ago
syspec|3 years ago
I was hoping they called themselves Krackheads
wpietri|3 years ago
unknown|3 years ago
[deleted]
psychlops|3 years ago
brezelgoring|3 years ago
Careful, some might infer a snide on their church and bite back to you.
Not me, I share your view.
kwertyoowiyop|3 years ago
CommitSyn|3 years ago
Why does a crypto exchange need 4,000 employees?
hn_throwaway_99|3 years ago
I'm not saying that a lot of these companies aren't overstaffed (indeed, that's why they are having layoffs!) but these questions always come across as pretty naive in the same way I hear "It's just a website! I could build that in a weekend"-type comments.
JumpCrisscross|3 years ago
Because they’re not an exchange. They’re a broker, lender and apparently a bank [1].
[1] https://www.kraken.com/bank
rabuse|3 years ago
diehunde|3 years ago
recvonline|3 years ago
nsonha|3 years ago
cjg|3 years ago
sokoloff|3 years ago
ChuckNorris89|3 years ago
renewiltord|3 years ago
WFHRenaissance|3 years ago
naillo|3 years ago
wpietri|3 years ago
One of the really startling things for me the first time we deposited a big VC check was how compelling the experience is. Printing out an ATM receipt with 7 figures on it was very memorable. We had to remind ourselves that however much it felt like success, it didn't mean shit in terms of our real goals.
I think that's much harder for people who are in that situation with less life experience and little or no experience building actual businesses. Coaching at entrepreneur events, I discovered there are a lot of people whose goal is to "be the next Mark Zuckerberg" (or whoever) or who wanted to found a unicorn. Who were thinking about it as a life stage, as in "I'm not sure if I'll found a startup or go to grad school".
And I suspect that's even more true lately with the vast amounts of VC money sloshing around. It must be quite easy to pay more attention to your investors and your YC cohort and the tech press than the grubby realities of commerce.
bibabaloo|3 years ago
It makes sense; if your competitors are hiring, you need to hire in order to keep up and so you don't get out-executed. If they're firing, then maybe you don't need to "keep up with the Jones" as much.
JumpCrisscross|3 years ago
This isn’t a CEO’s job.
simonebrunozzi|3 years ago
nipponese|3 years ago
Edit: more better words.
unknown|3 years ago
[deleted]
Seb-C|3 years ago
ericsoderstrom|3 years ago
brink|3 years ago
I interviewed with them earlier in the year, glad it didn't work out.
[1]: https://www.businessinsider.com/coinbase-blockchaincom-and-k...
basch|3 years ago
https://www.nytimes.com/2022/09/21/technology/ceo-kraken-cry...
It looks like hn changed the link as well. the original link had more info about their past statements. https://www.coindesk.com/business/2022/11/30/kraken-cuts-30-...
eloff|3 years ago
jiveturkey|3 years ago
Hendrikto|3 years ago
gaws|3 years ago
What job did you take instead?
game_the0ry|3 years ago
chson|3 years ago
purec|3 years ago
cmrdporcupine|3 years ago
panzagl|3 years ago
gigatexal|3 years ago
“Separation pay: We will pay 16 weeks of base pay for all departing Krakenites inclusive of the paid leave period.
Performance bonus: For those eligible, we will pay each departing Krakenite their bonus as determined by their manager.
Benefits: We will offer eligible Krakenites 4 months of healthcare continuation coverage inclusive of the paid leave period.
All Krakenites will continue to have access to counseling services during this period.
Extension of exercise window: We will extend departing Krakenites’ window to exercise their vested stock options.
Immigration support: Kraken will provide dedicated visa and immigration support for those currently on company-sponsored visas.
Outplacement support: We will provide career support for departing Krakenites, including networking opportunities, job search best practices, interview guidance, and more.”
cwkoss|3 years ago
minusthebrandon|3 years ago
KrakenEng|3 years ago
kwertyoowiyop|3 years ago
Finnucane|3 years ago
Without their crypto space suits, apparently.
Veen|3 years ago
bink|3 years ago
PedroBatista|3 years ago
dylan604|3 years ago
karp773|3 years ago
Am I the only one who finds it ironic that they blame geopolitical factors affecting what was shilled as a safe heaven from governments and geopolitical games?
rchaud|3 years ago
Animats|3 years ago
Ekaros|3 years ago
unknown|3 years ago
[deleted]
warent|3 years ago
resuresu|3 years ago
rvz|3 years ago
And yes before HN denies 'engineers not affected in layoffs narrative', they certainly are affected.
woeirua|3 years ago
cmcconomy|3 years ago
Animatronio|3 years ago
fuzzythinker|3 years ago
aruanavekar|3 years ago
acedTrex|3 years ago
newmac|3 years ago
woodruffw|3 years ago
brink|3 years ago
unknown|3 years ago
[deleted]
tedunangst|3 years ago
lucasmullens|3 years ago