Top blockchain analytics firms cut staff, reduce salaries to blunt coronavirus pandemic impact

Top three blockchain analytics firms - Chainalysis, Elliptic, and CipherTrace - have either laid off staff or cut salaries amid the coronavirus pandemic, The Block has learned.

London-based Elliptic has cut 30% of its workforce in the U.S. and the U.K., representing 28 employees, CEO James Smith told The Block.

"These are unprecedented times and we anticipate that the COVID-19 pandemic will cause a significant global economic downturn. Following careful consideration, Elliptic has made the difficult decision to reduce our global headcount. By moving swiftly to restructure our team, we are laying the foundation for a sustainable, high-growth business," said Smith. 

Elliptic continues to maintain employees in both the U.S. and the U.K. regions post-layoffs, Smith told The Block, quashing rumors that the entire U.S. team has been laid off.

"The U.S. is a key market for Elliptic and we continue to have a significant U.S. presence. We now have sales, marketing, product, policy and customer support personnel based in New York, including Tom Robinson, our co-founder and chief scientist," said Smith, adding:  

"New York remains our second-largest office after our London headquarters. We will also continue to grow our offices in Singapore and Tokyo, to reflect the growth of our customer base across Asia."

Elliptic's layoffs come two months after it raised $5 million from Wells Fargo Strategic Capital, which brought its total funding to $40 million since founding in 2013. 

Elliptic's net loss widened for the financial year ended in March 2019, according to the latest filing submitted to Companies House (the U.K.'s registrar of companies) on January 6, 2020. It had a net loss of £2.30 million (~$2.8 million) for the year, as compared to a net loss of £1.97 million (~2.45 million) for the fiscal year ended on March 31, 2018.

Smith, however, said that "Elliptic remains in a strong financial position" and that the firm "continues to see strong revenue growth."

"These changes ensure our ability to protect our clients from financial crime in crypto for many years to come. The global pandemic has brought a new commercial reality to all businesses, which cannot be ignored," said Smith.

Smith declined to comment on whether there have been any salary reductions in addition to the job cuts.

Salary cuts

Chainalysis is not immune to coronavirus either, as it has planned salary cuts in response. 

"We have temporary 10% pay cuts planned to go into effect in May through the end of the year (in accordance with local laws where we have employees)," Madeleine Kennedy, director of communications at Chainalysis, told The Block. "We're hoping for the best but planning for the worst, and so we will keep reevaluating market conditions between now and January in the hope that these actions can be even more temporary."

Notably, the planned salary cut is for all employees, said Kennedy, adding that "with a few exceptions for people who make $75k or less and for newer employees who recently signed contracts with us."

Chainalysis's proposed salary cuts follow its November layoffs, which affected 20% of its workforce or 39 employees, said Kennedy. At the time, the firm's headcount was 155.

Since November, Chainalysis has hired five new employees for "critical" roles, bringing the current headcount at 160 people, Kennedy told The Block, adding that the firm plans to maintain approximately the same headcount number "for the foreseeable future."

"The new hires were senior leadership roles and roles for us expanding into APAC [Asia-Pacific]," Kennedy clarified. 

More layoffs

Another major blockchain analytics firm, CipherTrace, has also cut its workforce.

A CipherTrace spokesperson told The Block that "most" layoffs were in sales and marketing functions, without disclosing specific numbers.

The Block has learned that CipherTrace has laid off 10% of its workforce. As of last November, the firm's headcount was over 70. It remains unclear how many people the firm currently employs.

The CipherTrace spokesperson said the layoffs have been made because the pandemic has changed the way business is done. "There are no face-to-face sales meetings anymore, and sales and marketing trade shows have all been canceled through the end of 2020. Now is the time to tighten our belts to weather this coronavirus storm," the spokesperson said.

As a result, CipherTrace is relying on its "inside" sales teams for the "foreseeable future."

"This reduces expenses in travel, printing of paper brochures, etc. It also means that as customers learn how to do business over Zoom and other virtual channels, we can be much more cost-effective," the spokesperson added.

They further said that CipherTrace is seeing "strong demand from new customers as well as renewals and growth from existing customers."

"In fact, the first week of April was one of our strongest sales weeks ever," the spokesperson said.

CipherTrace's engineering team, however, remains "strong" to continue developing solutions for businesses and governments, they added.