The crypto crisis is reaching Europe: now the Austrian fintech Bitpanda is downsizing on a large scale.

According to an open letter, more than a quarter of the thousand employees have to go.

Specifically, 270 employees are to be laid off, after which 730 employees will work for Bitpanda.

This reduction in staff comes as a surprise.

After all, the company was still looking for new staff until recently - and advertised "unlimited vacation".

Michael Seiser

Business correspondent for Austria and Hungary based in Vienna.

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Franz Nestler

Editor in Business.

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Apparently, the price drop for digital currencies is affecting the cryptocurrency exchange: The price of Bitcoin has fallen to less than $18,000;

on Monday, one bitcoin was trading at around $21,000.

The entire market for digital currencies slipped from a market capitalization of $3 trillion to currently around $960 billion.

According to the three founders Eric Demuth, Paul Klanschek and Christian Trummer, no one can currently say when the crypto market will recover and when Bitpanda will pick up again.

Market sentiment has "changed dramatically in recent months." There is "great uncertainty" in the financial markets, fueled "by geopolitical tensions, rising inflation and concerns about an impending recession."

Now they are trying to reorganize.

Employees are not only laid off in Vienna, but at more than ten locations in the European Union: In addition to Vienna, these are currently Amsterdam, Barcelona, ​​Berlin, Bucharest, Dublin, Krakow, London, Madrid, Milan and Zurich.

The company wants to help those affected by the layoffs to find new jobs.

There will also be free psychological help, the management announced.

Management admits mistakes

In the message to the workforce, the three founders also admitted to mistakes.

It was a "difficult" but "necessary" decision.

Bitpanda admits that the team's "growth rate" was "too high".

“Looking back, we recognize that our hiring pace was not sustainable.

That was a mistake,” it said.

Basically, the founders were in a positive mood that things would go up again.

With the downsizing, they want to remain "solidly capitalized" to "navigate through the storm and weather it financially in good health, no matter how long it takes for the markets to recover".

Users can trade Bitcoin, other cryptocurrencies and gold via the Bitpanda platform, which is present in Germany with the app of the same name, among other things.

The fintech was founded in 2014.

It is now valued at $4.1 billion.

It claims to have more than three million users.

It is still considered one of the thriving fintech platforms in Europe.

Like many other fintechs, Bitpanda is currently in a difficult situation.

But Bitpanda is doubly affected: On the one hand, there is the crypto crash.

This has put a big question mark behind the business models of numerous crypto companies.

A low price ensures that the commissions are also lower for the companies.

And some companies that had promised returns of around 17 percent could only achieve that with regular increases in the price of digital currencies.

The fall in Bitcoin's price thwarted Dam's plans: the most prominent victim is the Celsius Network.

Businesses and customers suffer equally

This company specialized in lending cryptocurrencies: You could deposit your own digital currencies there and get interest on them – other Celsius users could then borrow the digital currencies and pay a fee for them.

But the accounts were frozen, neither deposits nor withdrawals are possible.

This affects around 12 billion dollars from around 2 million customers.

German customers are also affected.

Whether they will ever get their money back is more than uncertain.

The Celsius Network is currently preparing for bankruptcy, according to the Wall Street Journal.

For this purpose, the fintech has secured consultants from Alvarez & Marsal.

Other crypto companies have also gotten into trouble: the price of the American crypto exchange Coinbase has literally collapsed;

This year alone from around 230 dollars to just over 50 dollars, almost minus 80 percent.

1100 employees are to be laid off.

Crypto.com has also announced that it will lay off 260 employees, and BlockFi is laying off another 170 employees.

Because in addition to the crypto crash, the interest rate environment in general is also weighing on fintechs: for them, loans are a growth engine.

Your ratings are based on the future business, which needs to be funded today.

If interest rates rise, the cost of borrowing rises, and with it profits or expectations of future business, or in the worst case: both.

On the other hand, there is concern that the turnaround in interest rates will cause investors to withdraw from equities (which tend to be unsafe) or no longer rely on venture capital and instead go to bonds (which tend to be safer).

Numerous fintechs in Europe have already felt this: You only have to look at Klarna, the number one.

Rumors have been floating around in the fintech scene for months that the Swedish payment service provider could soon be valued at just $15 billion instead of $45 billion – the doubts about the business model are too serious.

But the German fintechs also have something to nibble on at the moment: the neobank N26 has more to do with itself, as it has been under the supervision of the Bafin for some time and is only allowed to conduct new customer business to a limited extent.

The neobroker Trade Republic is struggling with the fact that the mood on the stock market has decreased significantly after the pandemic and people are no longer trading as much as they were at the beginning of the crisis.

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