Cryptocurrency exchange Swyftx axes 90 jobs with CEO blaming aftershocks of FTX collapse

Company expects further significant drops in trade and ‘the potential for more black swan-type events’

Brisbane-based cryptocurrency exchange Swyftx has cut 90 jobs citing the aftershocks of the collapse of global exchange FTX and a sharp fall in global trade.

In a message to staff on Monday, co-founder and CEO, Alex Harper, said while Swyftx had no direct exposure to FTX, the company was not immune to the fallout in crypto markets, and Swyftx was preparing for further significant drops in trade volumes in the first half of next year “and the potential for more black swan-type events”.

The cut represents approximately 35% of the company, which currently employs 235 people.

The affected staff will be contacted directly via email for consultation and will get severance pay within seven days of this week, and receive employee stock option plans for tenure plus six months.

The exchange has 630,000 customers in Australia and Harper said Swyftx was “uniquely well-positioned” to weather something like FTX’s collapse, but the company did not exist in isolation from the cryptocurrency market. He said the company, however, was too large.

“We are simply far larger than we need to be to operate and grow next year and beyond,” he said.

“We were genuinely hopeful in August that the revenue modelling we’d done would not require any further reduction in staff numbers, but the FTX situation has forced us to plan for a period of diminished trading activity.

“The truth is that Swyftx grew too fast.”

Harper said many at Swftx “are nursing a very strong sense of injustice” about the actions of FTX, and the impact on the industry.

“Cryptocurrency wasn’t the villain in this story, it was all too familiar human greed and indifference,” he said.

“Nonetheless, I’m afraid only time and Swyftx continually demonstrating it is different, each and every day, will put FTX behind us.”

Swyftx has a partnership with the NRL, which a spokesperson said was expected to continue next year.

FTX put its Australian companies into voluntary administration with KordaMentha last month after the collapse of the global cryptocurrency exchange at the start of November. About 30,000 Australian customers were owed money or cryptocurrency from the exchange, in amounts ranging up to $1m.

The Australian Securities and Investment Commission (Asic) at the time suspended the company’s Australian financial services licence (AFSL), which FTX was able to obtain by buying out a company that already held the licence.

Asic chief operating officer, Warren Day, appeared before a senate inquiry on Monday, where he was asked by Labor senator Deborah O’Neill on Monday about why Asic did not assess FTX’s fitness to hold the licence.

Day confirmed Asic had little power to assess businesses at the point of takeover for the fitness to hold a licence, and it was something Asic had been raising as an issue. He said since 2014, Asic had restricted the number of licences similar to what FTX had obtained, and had only issued a handful of new licences.

He said this made a takeover of the type FTX did to obtain such a licence very lucrative, and said the cost to buy a licence through that method was about $150,000 in 2014, but had increased to $2m in 2019, and would be even more today.

“That is one of the most difficult and highly prized licenses in the market. But … our ability then to scrutinise those off-market transfers of licenses is very low to nonexistent,” Day said.

O’Neill said it was a “massive hole” in regulation that allowed “a real cowboy” like FTX to enter the market and obtain a licence through such a method.

Day said there were limited resources for Asic to check every business when a takeover occurs – estimating there were likely hundreds a year.

Asic chair Joseph Longo said whatever regulation would be put in place, there would still be limits to protecting consumers from the “dark side” of cryptocurrency, and currently Asic was working within its limited resources and the limited regulation in the space.


Josh Taylor

The GuardianTramp

Related Content

Article image
Collapsed Australian crypto exchange Digital Surge owed $33m by FTX
More than half of Brisbane company’s digital assets were deposited with Sam Bankman-Fried’s exchange

Henry Belot

23, Dec, 2022 @4:05 AM

Article image
FTX collapse sends shockwaves through other Australian businesses
Withdrawals now suspended at the Brisbane-based cryptocurrency exchange Digital Surge for more than a week

Josh Taylor

29, Nov, 2022 @4:52 AM

Article image
Australian administrator of FTX warns customers may not get all their money back
KordaMentha works to untangle web of companies behind crypto exchange and determine who is owed money by which branch of the business

Josh Taylor

01, Dec, 2022 @5:39 AM

Article image
Cryptocurrency exchange FTX now worthless, says key investor
Firm valued at $25bn in 2021 suffered bank run-style crisis as investors rushed to withdraw money

Alex Hern UK technology editor

10, Nov, 2022 @11:28 AM

Article image
Cryptocurrency exchange FTX files for bankruptcy protection in US
Founder Sam Bankman-Fried resigns as CEO and tells of shock ‘to see things unravel the way they did’

Dan Milmo and Alex Hern

11, Nov, 2022 @5:00 PM

Article image
Binance to buy FTX in major cryptocurrency exchange merger
Public squabble between the two largest offshore exchanges’ bosses led to run on FTX and forced sale

Alex Hern

08, Nov, 2022 @6:13 PM

Article image
FTX bypassed regular process for obtaining Australian financial services licence
Crypto exchange took over a company that already held a licence and the regulator did not assess its fitness

Josh Taylor

22, Nov, 2022 @2:00 PM

Article image
Cryptocurrency company accidentally transfers $10.5m to Australian woman and doesn’t notice for seven months
Thevamanogari Manivel used money to buy Melbourne property before supreme court granted freeze on her bank account

Josh Taylor

31, Aug, 2022 @6:46 AM

Article image
Australian crypto exchange Digital Surge saved after $1.25m loan from creditors
The Brisbane-based firm lost $33m in the collapse of the global platform FTX but now aims to pay back customers over five years

Josh Taylor

24, Jan, 2023 @10:17 AM

Article image
Australian regulator had FTX under surveillance at time of collapse, documents reveal
Exclusive: Asic had concerns about crypto platform six months before spectacular failure

Josh Taylor

29, Jan, 2023 @2:00 PM