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Robinhood, the trading app that popularized one-click trading and helped fuel last year\u2019s meme stock frenzy, said on Tuesday that it was laying off about 23 percent of its work force.<\/p>\n
Vlad Tenev, the chief executive of Robinhood, said in a blog post<\/a> that the layoffs would affect employees across the company, especially those in operations, marketing and program management roles.<\/p>\n Robinhood declined to comment on the layoffs.<\/p>\n The announcement followed closely on the heels of cuts in April, when Robinhood laid off 340 workers<\/a>, or about 9 percent of its employees at the time. Since then, Mr. Tenev wrote, further worsening of the economy, including inflation and the crash of the crypto market<\/a>, has \u201creduced customer trading activity and assets under custody.\u201d The price of Bitcoin has fallen by more than half this year, to about $23,000 per coin. The cryptocurrency rose as high as $66,000 in late 2021.<\/p>\n<\/div>\n<\/div>\n The layoffs come as part of a wave of job cuts<\/a> at tech companies, including some cryptocurrency<\/a> firms. In June, cryptocurrency exchanges including Coinbase and Gemini announced that they were laying off employees. Last week, Shopify, an online marketplace, announced it was cutting<\/a> 10 percent of its 10,000 employees.<\/p>\n<\/div>\n<\/div>\n In his memo on Tuesday, Mr. Tenev said Robinhood misjudged the economy and trading activity. \u201cAs C.E.O., I approved and took responsibility for our ambitious staffing trajectory \u2014 this is on me,\u201d he wrote.<\/p>\n The company also released its second-quarter results<\/a> on Tuesday, reporting that its monthly count of active users declined to 14 million in June, a decrease of 1.9 million.<\/p>\n The turbulence represents a major comedown for Robinhood, which became a key player in the meme stock craze in early 2021, when investors banded together to drive up the stocks of companies including the video game retailer GameStop and the movie theater chain AMC. On Jan. 27, 2021, GameStop shares closed up nearly 1,800 percent from a few weeks before, a record<\/a>. Then, Robinhood restricted trading in some meme stocks. The restrictions led the stocks to plunge. Lawsuits<\/a>, a Securities and Exchange Commission investigation<\/a> and congressional hearings soon followed.<\/p>\n Robinhood\u2019s stock price soared during the meme-stock trading. On Aug. 7, 2021, the company was worth<\/a> $46 billion, up about 60 percent from its valuation a week before. But its stock has plunged 50 percent since the beginning of the year as it continues to deal with the fallout.<\/p>\n<\/div>\n<\/div>\n The layoffs come at a challenging moment for financial technology companies.<\/p>\n Coinbase, the publicly traded cryptocurrency exchange, laid off 18 percent of its staff in June amid the crypto market crash. Other major crypto companies, like OpenSea, Gemini and Crypto.com<\/a>, have also made job cuts.<\/p>\n<\/div>\n<\/div>\n \u201cEveryone over-hired \u2014 Coinbase over-hired, Robinhood over-hired. When money was easy, they were just hiring, hiring, hiring,\u201d said Dan Dolev, a senior analyst at Mizuho. \u201cI\u2019m not surprised to see these cuts.\u201d<\/p>\n The overall value of the cryptocurrency market is down to about $1 trillion from $3 trillion last year, when enthusiasm for crypto trading peaked and the price of Bitcoin reached a new high.<\/p>\n Robinhood has been working to build out its crypto arm this year, listing new coins and rolling out a crypto wallet product. \u201cThe one thing that I liked the least about Robinhood is their crypto exposure,\u201d Mr. Dolev said. \u201cAnything that has no intrinsic value is always prone to problems.\u201d<\/p>\n Also on Tuesday, the New York State Department of Financial Services announced it was fining<\/a> Robinhood\u2019s crypto operation $30 million over violations of its anti-money laundering and cybersecurity regulations.<\/p>\n \u201cAs its business grew, Robinhood Crypto failed to invest the proper resources and attention to develop and maintain a culture of compliance,\u201d Adrienne A. Harris, the superintendent of financial services, said in a statement.<\/p>\n Cheryl Crumpton, associate general counsel at Robinhood, said in a statement that the company was \u201cpleased\u201d the settlement had been finalized. \u201cWe have made significant progress building industry-leading legal, compliance, and cybersecurity programs, and will continue to prioritize this work to best serve our customers,\u201d she said.<\/p>\n<\/div>\n<\/div>\n