Chainalysis has announced an upcoming layoff, putting about 150 of the firm’s approximately 900 staff members out of work.
The layoff follows a smaller one of about 4.8% of staff back in February.
In an e-mail to those affected, Chainalysis CEO Michael Gronager reportedly affirmed that the layoffs are a sad but necessary part of the firm’s pivot towards clients in the public sector.
Although a large part of Chainalysis’ business has always come from government agencies attempting to track down criminals who used cryptocurrencies to hide illicit profits, a significant share of its revenue came from firms in the private sector who used its Reactor software to ensure that they meet compliance standards.
Now, with a second year of contractions in crypto markets and no end in sight, Chainalysis has made the decision to downsize its private sector offerings and focus on its contracts with government agencies – a wise decision at a time when more enforcement actions are on the horizon.
In spite of the layoffs, the blockchain sleuth company valued at $8.6 billion last year will continue to develop new software solutions. Madeleine Kennedy, VP of Communications at Chainalysis, stated that the firm’s decision should be seen as a mere shift in priorities and not a slump in activity.
“This reorganization reflects our ongoing strategic shifts to balance our growth aspirations. We are going to focus on profitability and maturity and to ensure that we are agile in light of evolving market forces. The public sector still has a lot of way to go in creating a safe and regulated environment. In addition to anti-money laundering regulations, there’s still lots of other regulatory issues like prudential soundness, market conduct, and consumer protection that need to be addressed.”
According to Kennedy, the firm’s financial situation is still stable, with “ample cash reserves.” Therefore, these layoffs are more to ensure future stability than a last-ditch attempt at keeping afloat.
Government contracts already made up 70% of Chainalysis’ revenue. With services provided for cases from the most exciting to the more mundane bean-counting activities done to ensure compliance, Chainalysis has been a useful tool for law enforcement since its inception.
Unfortunately, the stream of revenue from private clients has dwindled, leaving the crypto sleuth firm with fewer options.
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