Brisbane-based cryptocurrency exchange Swyftx has cut 90 jobs citing the aftershocks of the collapse of global exchange FTX and a sharp fall in global trade.
In a message to staff on Monday, co-founder and CEO, Alex Harper, said while Swyftx had no direct exposure to FTX, the company was not immune to the fallout in crypto markets, and Swyftx was preparing for further significant drops in trade volumes in the first half of next year “and the potential for more black swan-type events”.
The cut represents approximately 35% of the company, which currently employs 235 people.
The affected staff will be contacted directly via email for consultation and will get severance pay within seven days of this week, and receive employee stock option plans for tenure plus six months.
The exchange has 630,000 customers in Australia and Harper said Swyftx was “uniquely well-positioned” to weather something like FTX’s collapse, but the company did not exist in isolation from the cryptocurrency market. He said the company, however, was too large.
“We are simply far larger than we need to be to operate and grow next year and beyond,” he said.
“We were genuinely hopeful in August that the revenue modelling we’d done would not require any further reduction in staff numbers, but the FTX situation has forced us to plan for a period of diminished trading activity.
“The truth is that Swyftx grew too fast.”
Harper said many at Swftx “are nursing a very strong sense of injustice” about the actions of FTX, and the impact on the industry.
“Cryptocurrency wasn’t the villain in this story, it was all too familiar human greed and indifference,” he said.
“Nonetheless, I’m afraid only time and Swyftx continually demonstrating it is different, each and every day, will put FTX behind us.”
Swyftx has a partnership with the NRL, which a spokesperson said was expected to continue next year.
FTX put its Australian companies into voluntary administration with KordaMentha last month after the collapse of the global cryptocurrency exchange at the start of November. About 30,000 Australian customers were owed money or cryptocurrency from the exchange, in amounts ranging up to $1m.
The Australian Securities and Investment Commission (Asic) at the time suspended the company’s Australian financial services licence (AFSL), which FTX was able to obtain by buying out a company that already held the licence.
Asic chief operating officer, Warren Day, appeared before a senate inquiry on Monday, where he was asked by Labor senator Deborah O’Neill on Monday about why Asic did not assess FTX’s fitness to hold the licence.
Day confirmed Asic had little power to assess businesses at the point of takeover for the fitness to hold a licence, and it was something Asic had been raising as an issue. He said since 2014, Asic had restricted the number of licences similar to what FTX had obtained, and had only issued a handful of new licences.
He said this made a takeover of the type FTX did to obtain such a licence very lucrative, and said the cost to buy a licence through that method was about $150,000 in 2014, but had increased to $2m in 2019, and would be even more today.
“That is one of the most difficult and highly prized licenses in the market. But … our ability then to scrutinise those off-market transfers of licenses is very low to nonexistent,” Day said.
O’Neill said it was a “massive hole” in regulation that allowed “a real cowboy” like FTX to enter the market and obtain a licence through such a method.
Day said there were limited resources for Asic to check every business when a takeover occurs – estimating there were likely hundreds a year.
Asic chair Joseph Longo said whatever regulation would be put in place, there would still be limits to protecting consumers from the “dark side” of cryptocurrency, and currently Asic was working within its limited resources and the limited regulation in the space.