Kraken lays off 30% of staff
blog.kraken.com
blog.kraken.com
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?
Fraud and ponzis work fine for a while, but a downturn is exactly what causes its instability to show.
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.
More fun news to come.
Crypto is performing far worse than even the riskiest decile of the stock market. Which should surprise nobody.
If you want to go for a rodeo, there are litanies of similar success stories in penny stock and angel investing.
It seems like the pro-crypto arguments end up being circular sometimes (not from the same person but the community).
If the market is good, it's a great investment.
If the market is bad, buy the dip!
If it's unstable, remember all thos people who made money?
If it's stable, well it's a currency after all.
There are so many people who view crypto differently there's always someone there to sing it's praises. I'll still have no idea what crypto is supposed to be aside from a vehicle for fraud.
It's anonymous payment!
Great for
- avoiding sanctions
- selling drugs
- receiving blackmail payments
Those are huge markets that are completely untapped by legacy payment processors!
If that doesn't sound like a great investment opportunity!
This isn’t how numbers work.
Also, practically every asset class has a member that went to zero. The question is what fraction, and how did the others do. If you bought a basket of super-risky assets, over the past years, they went up like crypto and down less.
Huh?
> This is not true. The riskiest stocks are down thousands of %.
I mean, sure looks like you were trying to argue that crypto isn't performing worse than the riskiest decile of the stock market, which just isn't true at all.
The iShares Small Cap Growth ETF (which is a probably a decent proxy for the most volatile companies in the market) is only down 13% on the year.
Former options market maker here. Taking leveraged, directional risk with options is textbook reckless trading. That Robinhood found people to swing options and crypto is not representative of traditional finance.
What made Robinhood (originally) unique was stripping away those protections, or otherwise automating them away in a mobile app. We have lots of concrete examples of people losing their life's savings on Robinhood, in no small part because of how easy it made leveraging oneself.
Your knowledge around opening an options account is slightly outdated. They used to have net worth requirements and more legal forms. Some time around 2020 though at the beginning of the pandemic all of this was removed. It's a few clicks now at pretty much any major investment bank such as TD Ameritrade.
The only commonly traded way to lose more than you started with are futures (not available on most retail platforms) and CFDs (not legal in many markets, including the USA).
"The riskiest stocks are down thousands of %" is untrue regardless of whether that position was in regular shares or /r/WSB style 10,000 calls expiring Friday.
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."
Or something like that?
Warren was just telling us about something he observed at the beach one time
Are you suggesting that crypto is to blame for inflation? how would that work?
No. The only claim is that crypto is sleeping in the bed it made, bedfellows included.
All of cryptocurrency is a risk asset. When credit and money is cheap and flowing freely, it flows into risk assets like crypto, driving up their price and forming bubbles. When rates rise and credit and money is no longer flowing freely, it flows out of risk assets into safer havens, popping the bubbles. That's what happened to crypto this year.
The collapses and fraud revelations were a consequence of that, not the cause. Blaming the macro is accurate.
Lol. Lmao, even.
"When the tide goes out you discover who's been swimming naked."
Sam Bankman was clearly a smooth political operator.You don't have meeting with Gary Gensler the head of the SEC otherwise.
No, he wasn’t. This is a myth he crafted for his retail audience. He threw money around. But D.C. is filled with schmucks buying photo ops for millions of dollars.
> don't have meeting with Gary Gensler the head of the SEC otherwise
You’re saying SBF’s donations, and not his role as CEO of FTX, got him a meeting with FTX’s regulator?
where did you find that? i've not seen it (yet)
> Sam Bankman-Fried’s donations to Democrats are well documented. In an interview released Tuesday, the former FTX CEO said he similarly funded Republican campaigns—but kept it quiet.
> “All my Republican donations were dark,” SBF told crypto influencer and YouTuber Tiffany Fong, referring to political donations that aren’t publicly disclosed. “The reason was not for regulatory reasons, it’s because reporters freak the fuck out if you donate to Republicans. They’re all super liberal, and I didn’t want to have that fight.”
His co-CEO also publicly donated millions to Republican causes. https://www.opensecrets.org/outside-spending/donor_detail/20....
The vast majority of crypto advocates are true believers.
I've seen startups struggle to raise in March when less attractive competitors raised with ease in February.
Bitcoin is down 63% vs 9 months ago
Just sayin
> 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.
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.
The statement just came across as very roundabout: we all understand that the current downturn in cryptocurrency is driven in part by a decline in "easy money" from retail customers, which in turn is partially driven by a lot of that "easy money" outright evaporating from fraudulent schemes.
For Kraken the slowdown is less business. Crypto is down, as are equity markets, and these are highly correlated (go figure - "inflation hedge").
I'm not even sure if FTX blow up itself is bad for them. Not only is a competitor out, but also people might appreciate a regulated crypto exchange.
So I think maybe "geopolitical" is not outrageously wrong a term to use here.
Any other critiques of crypto are not affected.
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."
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.They're following Meta's example in hopes of not getting flamed on social media. Otherwise, the packages would be half as generous.
I was hoping they called themselves Krackheads
* Severance pay. We will pay 14 weeks of severance for all departing 'Strippers', and more for those with longer tenure. That is, those departing will be paid until at least February 21st 2023.
* Bonus. We will pay our 2022 annual bonus for all departing 'Strippers', regardless of their departure date. (It will be prorated for people hired in 2022.)
* PTO. We’ll pay for all unused PTO time (including in regions where that’s not legally required).
* Healthcare. We’ll pay the cash equivalent of 6 months of existing healthcare premiums or healthcare continuation.
* RSU vesting. We’ll accelerate everyone who has already reached their one-year vesting cliff to the February 2023 vesting date (or longer, depending on departure date). For those who haven’t reached their vesting cliffs, we'll waive the cliff.
Careful, some might infer a snide on their church and bite back to you.
Not me, I share your view.
You don't hear about the vast majority of EAs who just quietly try and improve girl's education in Indian or distribute malaria nets (to mention two I know personally).
For a movement that prides itself on being evidence-based, there is a lot of evidence EA is willing to ignore.
I don't see how that can be discredited as a personal moral philosophy, even if you don't personally disagree with it.
SBF and FTX fraud doesn't discredit that it's more cost effective to educate people in certain areas than others.
You seem to believe that "truly good" causes have a requirement to have "influential backers" behind them in order for you to consider doing them. That seems like a pretty silly way to decide what things are good/bad to do -- People did the same thing with FTX when Matt Damon's commercial aired, and look how that ended up for them. Maybe just research concepts for yourself and decide what's a good idea rather than waiting for a celebrity or rich person to tell you it's worth doing. Chances are, things celebrities tell you to do are the things LEAST worth doing.
The FTX failure was because they were extending leverage to customers to purchase and short extremely volitile cryptocurrencies, including obscure/illiquid/likely-worthless ones (which they marketed heavily). The fact that they also diverted or personally pocketed some hundreds of millions on the back of stimulant-mania induced exuberance at the value of the magic-bean collateral they were holding didn't help things, but it wasn't the proximal cause. If pilfering the company were the issue it looks like from the magnitudes disclosed so far they could have just operated out of it.
The reason it's easy to link to EA forum posts telling people to NOT scam for the "greater good" is because it's responding a common view: it's a natural conclusion of navel gazing utilitarian-consequentialist thinking, especially if amplified by viewing all ethical questions through the lens of extinction risk. Doubly so in the face of "rationalist" ideology which is prone to reject received conventional wisdom in favor of bespoke and often self-serving rationalizations. Ordinary non-utilitarian-consequentialist charity communities don't need regular reminders to not scam people.
"Is it infinitely good to do double-or-nothing coin flips forever? Well, sort of, because your upside is unbounded and your downside is bounded at your entire net worth. But most people don’t do this, because their utility is more like a function of their log wealth or something and they really don’t want to lose all of their money. (Of course those people are lame and not EAs; this blog endorses double-or-nothing coin flips and high leverage.)" -- Caroline Ellison CEO of Alameda Research, responding to Scott Alexander of SSC in Feb 2021
"take advantage of strategies other people are biased against using" -- Peter Singer, "The Most Good You Can Do"
The source is down on the Singer quote (actually he’s quoting Wilbin) but the context of it is a discussion of how donated dollars travel further in poorer nations. I can’t find any related text around the quote that suggests any nefarious insinuation.
Absent the last several months was there really a lot of people confused on EA forums about the moral weight of intentional fraud? These are pretty elementary issues in non-insane branches of utilitarian moral philosophy…
Why does a crypto exchange need 4,000 employees?
Because they’re not an exchange. They’re a broker, lender and apparently a bank [1].
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've personally watched morons come in, hire lots of useless employees, and destroy millions of dollars of cash while producing negative effect on the product in a company I cofounded. It happens.
Despite the common refrain, the question is genuinely interesting and it deserves an interesting answer. What's old is the retort "that's just how big companies work". It might entirely be true that 4000 employees is reasonable (or even low!) for an exchange, but I'd really like to hear the arguments.
Companies don't hire tons more people to maintain their existing products. They hire more people because they want to build more stuff. If you are happy just having the thing you have and keeping it up, sure. But it is clear that the past five years or so has had a big scramble to try to scoop up as much of the crypto pie as possible so you can exit for billions. That means building new features. That means hiring a lot more people. And sometimes all those new people come in, fuck up in their mission to create more value for the company, and leave it worse off.
It is true that existing product offerings for a ton of companies could be maintained effectively by a subset of their workforce. A large portion of the employees are just working on building new shit.
Someone could certainly go through the exercise of deciding how many employees Kraken, Twitter, etc "should" have to perform the functions that someone is aware of, but it's an imprecise straw man at best.
However, when a company grows rapidly due to high interest in their product, the quickest way to manage that growth is typically going to be manpower.
There are indeed better solutions, but manpower works in a lot of industries, particularly those that grow their volume quickly.
I think the surging popularity of crypto prior to our current downturn sparked some rapid growth and the need for more workers.
On the technical side you really want to build your infrastructure so that it can scale up quickly, but on the customer facing side that's not always possible and thus you might need more personnel to man the chats and phones.
It's sometimes easy to look at a problem from an external view and go wow why do they do it that way, but in my own experience there are unseen internal reasons or obstacles for why a company is not doing it in a seemingly obvious better way.
I would agree that the more employees a company has, the more the architecture/design shapes around the size of their labor force. But it also doesn't have to be that way
Let's watch Twitter and see
WhatsApp is the exception, not the rule.
People have no trouble understanding why Walmart has 2.3 million employees - because they roughly understand “each store has X”.
With 3,700 employees, that's a revenue-per-employee of $270k.
If you are a startup, that is ok, maybe even great!
If you are not a startup, and are in tech/finance that is NOT OK.
Kraken is not a startup.
Of course, my context is the tech sector and not the scammy free-for-all that is crypto, so I may be off-base.
Their RPE is more like a struggling, dingily-lit, zombie chain of brick-and-mortar retail stores than it is a tech firm.
I know HN doesn't like metrics like RPE, but they're never wrong.
edit: just looked it up. For comparison, Binance has around 6,000 employees and around $20 billion in annual revenue which is off the charts in terms of RPE, even for oil and gas. That's a sign they need to hire more.
This isn’t a CEO’s job.
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.
Part of the reason cash out refinancing is so fraught with peril.
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.
Edit: more better words.
I interviewed with them earlier in the year, glad it didn't work out.
[1]: https://www.businessinsider.com/coinbase-blockchaincom-and-k...
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-...
An offer, in the context of a job interview, always refers to a (paper) contract describing the job title, salary, equity, benefits and other clauses, and implies that the company is ready to hire the candidate.
However, if your assumption is correct, that the company approached eloff with an offer without an interview, that actually means an invitation to have an interview with the company, with no guarantees of getting the job, so when eloff says “I'm so glad I turned down the job offer at Kraken”, I read that as “I declined an invitation to interview with Kraken”.
I have heard many people use the word “offer” to describe an invitation to interview for a job, and it irks me every time.
What job did you take instead?
“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.”
Some 20 years? in and what value has the blockchain provided? What is it being used in that has changed the world? Crypto bulls are all the same: Hayek acolytes hell bent on currency that isn’t fiat.
It is a Ponzi-scheme: it only works if you can find another putz to buy a coin.
Also only the early “investors” made any money in crypto. Just like in a Ponzi scheme. ;)
Again back to the original post though good on this “company” for doing right by its employees.
Your incorrect definition of ponzi scheme is essentially 'basic market dynamics in an inflationary economy' and would include the vast majority of financial products in the world, including the ones your probably trust.
Stocks only work if you can find another putz to buy it.
People who are early in any stock take money from later investors.
Also, anyone who purchased bitcoin in the first 12 of the 14 years it has existed is in the green. I think "only early investors" is a pretty superlative way of expressing that.
Without their crypto space suits, apparently.
And I'd expect the calculus is "we're planning to offer severance and paying out bonuses, so they have stability in their consumer choices, and we can start the clock earlier on their severance by doing it as soon as possible (including during a holiday when those employees probably weren't going to be very productive anyway)"
Since most people use the money and PTO from their jobs to enable these goals, losing one's job during this time of year adds an extra layer of stress to those who might have hoped to celebrate the culturally dominant evil made up consumerist capitalist holiday with their loved ones.
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?
And yes before HN denies 'engineers not affected in layoffs narrative', they certainly are affected.