US online brokerage Robinhood is to lay off 23% of its staff, or more than 750 people, as interest in the stock market and cryptocurrencies has fallen sharply since a boom during the pandemic. “Last year, we were recruited under the assumption that the stock market and crypto appetite seen in the Covid era would continue into 2022.Head Vlad Tenev explained to the employees in a letter posted on the company’s blog.
The California-based company had already laid off about 9% of its workforce at the end of April after seeing active users fall 8% between the third and fourth quarters of 2021. He also noted that he will focus on cost control. “It wasn’t enough“, Vlad Tenev notes in his message addressed to “robin hoodies(them)Robin Hoods“, a pun on Robin Hood and “hoodie:which means hooded). “Since then, we have witnessed a further deterioration of the macroeconomic environment, with the highest inflation in 40 years accompanied by a crypto-market crash.– he elaborates. “This further reduced our customer base and assets under our control.»
The platform, which went public a year ago, is retaining about 2,600 employees after laying off about 1,100 people overall. This second wave of cuts will affect all trades, but primarily operations and marketing, the boss said. The service had about 15 million monthly active users at the end of June, down 28% from last year, according to its quarterly earnings release on Tuesday. Within a year, its turnover decreased by 44%. Faced with the cryptocurrency crisis, several investment platforms that specialize in these volatile currencies have recently declared bankruptcy.
And in general, many tech companies have slowed hiring or laid off staff as they face the unfavorable economic context. Shopify, the online sales platform, announced last week that it was laying off 10% of its employees, or about 1,000 people, because the mass adoption of e-commerce during the lockdown did not translate into much change. habits faster than he expected. .
$30 million fine
Although short, Robinhood’s history has already been marked by several controversies. Its founders have reiterated that they want todemocratize access to finance“, but their economic model is troubling, as the platform finances the lack of commissions by subcontracting large volumes of its orders to intermediaries who pay it. Legal practice, but opaque and a source of potential conflicts of interest. On Monday, New York’s financial services regulator fined his cryptocurrency business $30 million for violating money laundering and cybersecurity laws.
“We have made significant progress in implementing our cybersecurity and legal compliance programs, and we will continue to prioritize this work for the benefit of our customers.Robinhood’s lawyer Cheryl Crompton, contacted by AFP, responded. “We are proud to provide a more accessible and cheaper platform to buy and sell crypto“, he added.
Robinhood gained global recognition in January 2021 during the GameStop saga, when thousands of small shareholders drove the video game chain’s stock from $17 to $500 in a matter of days. Unable to control the flow of orders, Robinhood had to block certain trades at the risk of blowing itself up, angering many stockbrokers. The company’s shares have lost half of their value since the beginning of the year.
Source: Le Figaro
I am David Wyatt, a professional writer and journalist for Buna Times. I specialize in the world section of news coverage, where I bring to light stories and issues that affect us globally. As a graduate of Journalism, I have always had the passion to spread knowledge through writing.