Crypto market maker GSR has implemented further layoffs, impacting between 5% and 10% of staff, according to three sources with knowledge of the situation.

The cuts are closer to 5% than 10%, said two of the sources. One added that there has also been an increase in resignations in recent weeks for reasons including low bonus payouts in January. A LinkedIn post from one affected GSR employee also referenced recent redundancies at the trading firm.

"GSR is in a healthy financial position and we continue to adapt to market conditions as the digital asset landscape evolves," said a GSR spokesperson. "We aim to broaden our lead as the top client-centric financial services firm in crypto. We are doubling down on delivering institutional-quality trading services and best-in-class risk management to our clients."

The layoffs come as the crypto industry is in a state of flux, particularly for trading firms that are facing the brunt of the crypto winter. GSR already completed a round of layoffs in October following a year of rapid expansion. At the time, GSR said it had 300 employees. 

Human resources hit

The divisions hit by the latest cuts include the human resources, risk and admin teams, said one of the sources familiar with the restructuring. GSR's chief technology officer told staff last week that some engineering teams are over capacity and may be restructured or laid off, said another source.

GSR did not respond to a request for comment on the extent of the layoffs and which teams were worst affected, though the spokesperson pointed out that headcount has increased for 10 years straight and "we continue to be extremely bullish long term." 

Founded by former Goldman Sachs executives in 2013, GSR is one of the oldest market makers in crypto. It offers services from over-the-counter trading to risk management and has also been exploring NFT market-making. 

At the height of the bull market, GSR was on a hiring spree. In July of 2021, the firm was on track to expand its headcount to more than 200 people from just 25 the year before, said Rich Rosenblum, co-founder of GSR, on The Scoop podcast. 

Crypto winter's chill

Now the good times are over, GSR is not alone in having to pare back its ambitions. The lending arm of key competitor Genesis recently filed for Chapter 11 bankruptcy protection following significant losses from several high-profile crypto collapses. And many exchanges, to which market makers provide liquidity, have implemented layoffs — including Kraken and Coinbase. 

In December 2022, GSR's CEO Jakob Palmstierna said he saw the downfall of crypto exchange FTX and sister hedge fund Alameda Research as an opportunity. GSR said its exposure to Alameda was zero and its exposure to FTX was in the single-digit percentage of the firm's cash balance.

“The opportunity for someone like GSR is to continue operating like we are doing and being transparent and providing liquidity across exchanges — centralized, decentralized and for token issuers — because without it, the networks don't work,” said Palmstierna in an interview. “First, you stabilize the markets and then you continue to build on the franchise.”

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Additional reporting from Tim Copeland.