Chainalysis to lay off 48 employees, prepares to reorganize structure

After a year of a prolonged crypto winter in which former industry powerhouses laid off large chunks of their employees in a desperate bid to stay afloat, other companies are feeling the pinch too, even if their MO doesn’t rely solely on asset prices.

Decreased demand from private customers

According to Maddie Kennedy, director of communications at blockchain research firm Chainalysis, a round of layoffs targeting non-core staff will take place shortly. According Forbes, the wave of layoffs will mainly target the sales team. Another group of employees will not be laid off, but instead assigned new roles and a new organizational structure.

According to Chainalysis, the layoffs are necessary due to a massive decline in private sector clients, who have decided to take a more cautious approach to crypto given everything that has happened over the last year. It’s understandable, considering everything from falling prices to stunts galore to trade implosions of epic proportions.

However, it’s worth noting that while Chainalysis has lucrative contracts with investment-oriented firms like BNY Mellon, more than half of the research firm’s revenue — around 60%, to be exact — comes from contracts with various regulatory entities. These include the SEC, DEA, and FBI, tracking down cybercriminals with their vast team of investigators.

Chainalysis expects the reduction to be temporary

Although revenues have contracted, Bloomberg reports that the layoff, which is already small compared to others we’ve seen in the industry over the last year, is just the first step in a larger reorganization process that Chainalysis is undergoing.

Speaking at the World Economic Forum in Davos earlier this month, Chainalysis CEO Michael Gronager hinted at future plans for his company.

These include potential acquisitions of unnamed companies, presumably smaller research firms that could help Chainalysis cement its position, and a wave of hiring. If all goes to plan, Chainalysis can increase its workforce by approximately 11% through the end of the year, bringing the total workforce to approximately 6% more than its pre-layoff workforce.

As Bloomberg said, the intensity of the Chainalysis investigation strengthened in the last two months of 2022 due to the collapse of FTX and the subsequent follow-up of the missing funds. With bankruptcy cases involving Celsius, Voyager, FTX, and others nowhere near a resolution, it looks like Chainalysis will continue to have a lot of work to do.