‘The Music Has Stopped’: Crypto Firms Quake as Prices Fall

THE NEW YORK TIMES: Crypto companies are laying off staff, freezing withdrawals and trying to stem losses, raising questions about the health of the ecosystem.

Employees of Coinbase in Times Square last year for its initial public offering. On Tuesday, the company said that it was laying off 18 percent of its workers. | Gabby Jones for The New York Times
SAN FRANCISCO — No one wanted to miss out on the cryptocurrency mania.

Over the last two years, as the prices of Bitcoin and other virtual currencies surged, crypto start-ups proliferated. Companies that market digital coins to investors flooded the airwaves with TV commercials, newfangled lending operations offered sky-high interest rates on crypto deposits and exchanges like Coinbase that allow investors to trade digital assets went on hiring sprees.

A global industry worth hundreds of billions of dollars rose up practically overnight. Now it is crashing down. After weeks of plummeting cryptocurrency prices, Coinbase said on Tuesday that it was cutting 18 percent of its employees, after layoffs at other crypto companies like Gemini, BlockFi and Crypto.com. High-profile start-ups like Terraform Labs have imploded, wiping away years of investments. On Sunday, an experimental crypto bank, Celsius, abruptly halted withdrawals.

The pullback in the crypto ecosystem illustrates the precariousness of the structure built around these risky and unregulated digital assets. The total value of the cryptocurrency market has dropped by about 65 percent since autumn, and analysts predict the sell-off will continue. Stock prices of crypto companies have cratered, retail traders are fleeing and industry executives are predicting a prolonged slump that could put more companies in jeopardy. » | David Yaffe-Bellany and Erin Griffith | Tuesday, June 14, 2022