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Economy, stock market and business news on August 2, 2022

credit…Sasha Maslov of The New York Times

Robinhood, the trading app that popularized one-click trading and fueled last year’s memetic stock craze, announced Tuesday it was laying off about 23% of its workforce.

Robinhood CEO Vlad Tenev said in a blog post that the layoffs will affect employees across the company, especially those in operations, marketing and program management roles.

Robinhood declined to comment on the layoffs.

The announcement follows cutbacks in April when Robinhood laid off 340 employees, or about 9% of its workforce at the time. Since then, Teneff wrote that further economic downturns, including inflation and the cryptocurrency market crash, have “decreased client trading activity and assets under custody.” Bitcoin’s price has fallen by more than half this year to around $23,000 per coin. Cryptocurrencies will hit $66,000 in late 2021.

The layoffs come as part of a series of job cuts at tech companies, including some cryptocurrency companies. In June, cryptocurrency exchanges such as Coinbase and Gemini announced they would lay off employees. Last week, his online marketplace, Shopify, announced he would cut 10% of his 10,000 employees.

In a note Tuesday, Teneff said Robinhood misjudged economic and trading activity. “As CEO, I have authorized and held an ambitious staffing trajectory, which is my responsibility,” he wrote.

The company also released second-quarter results on Tuesday, reporting monthly active users fell by 1.9 million to 14 million in June.

The turbulence marked a major turning point for Robinhood, which has become a major player in the memetic stock boom in early 2021. Investors have banded together to boost shares of companies such as video game retailer GameStop and movie theater chain AMC. Has been updated. Robinhood has since restricted the trading of some meme stocks. Stocks plummeted because of the restrictions. Lawsuits, Securities and Exchange Commission investigations, and congressional hearings soon followed.

Robinhood’s stock price soared during trading of meme stocks. As of August 7, 2021, the company is valued at his $46 billion, up about 60% from its valuation a week ago. But its share price has plunged 50% since the beginning of the year as it continues to deal with the impact.

Layoffs come at a difficult time for financial technology companies.

Publicly traded cryptocurrency exchange Coinbase laid off 18% of its staff in June amid the crypto market crash. Other major cryptocurrency companies such as OpenSea, Gemini and are also laying off staff.

“Everyone is overhired — Coinbase is overhired, Robinhood is overhired. When money was easy, they were just hiring, hiring, hiring,” said Mizuho Senior Analyst Dan Dreb. Told. “I’m not surprised to see these cuts.”

The overall value of the cryptocurrency market has fallen to around $1 trillion from $3 trillion last year, when cryptocurrency trading enthusiasm peaked and bitcoin’s price reached new highs.

Robinhood has been building its cryptocurrency sector this year, listing new coins and rolling out a cryptocurrency wallet product. “One of the things I disliked most about Robinhood is its exposure to cryptocurrencies,” Drev said. “Things without intrinsic value are always prone to problems.”

Also on Tuesday, the New York State Department of Financial Services announced that it would fine Robinhood’s cryptocurrency business $30 million for violating anti-money laundering and cybersecurity regulations.

“As the business grew, Robinhood Crypto failed to provide the appropriate resources and attention to develop and maintain a culture of compliance,” said Adrian A. Harris, head of financial services. said in a statement.

Robinhood associate general counsel Sheryl Crampton said in a statement that the company was “delighted” that the settlement had been reached. We have made great strides in building our cybersecurity program and will continue to prioritize this work to best serve our customers,” she said.