Amber continues layoff campaign in FTX bankruptcy aftermath

By Al Mayadeen English
Source: Agencies
7 Dec 2022 16:11

The FTX aftermath forced Amber to continue its layoff campaign despite having previously declared that there will be no more layoffs post-November.

Amber continues layoffs campaign in the aftermath of FTX bankruptcy (Amber Group)

The bankruptcy of FTX, rising inflation, and a generally gloomy economic outlook have caused chaos in the cryptocurrency industry. Companies are battling to survive as a result of the $2 trillion loss in tokens' value.

In the aftermath of the bankruptcy, US media claimed that the Amber Group, one of Asia's major crypto platforms, has continued to slash costs by terminating employees.

Due to the heightened volatility in the global economy, Amber announced in September that it will lay off about 10% of its workforce. The corporation had intended to cease laying off employees in November, but an unanticipated market downturn necessitated additional layoffs.

Internet users have been predicting that Amber is about to go bankrupt, but the business claims otherwise, noting that everything continues "business as usual."

Former traders from Morgan Stanley started Amber in 2018. The platform's trading volume reached $1 trillion, and there are 1,000 institutional clients using it. Amber previously disclosed that less than 10% of its trading money was locked in FTX, while the company's senior management reassured investors that this does not threaten the company's main operations.

Major banks see profits from crypto leftover, but FTX is a threat

As major banks and financial institutions steered away from what Jamie Dimon called a “decentralized Ponzi scheme,” the gap was filled by small lenders who saw profit in helping service companies that include but are not limited to, Silvergate Capital Corp., Provident Bancorp Inc., Metropolitan Commercial Bank, Signature Bank and Customers Bancorp Inc. The latest crackdown and collapse of FTX puts them center-stage.

Silvergate goes back with cryptocurrency to when it first began with just Bitcoin. The former's CEO, Alan Lane, saw potential in building products to serve the market's needs: “What I saw,” he said, “was an opportunity to bank these companies that were essentially being de-risked from other banks.”

Lane set up a payment network that connects dollars and crypto, through his Silvergate Exchange Network (SEN), which offers users the opportunity to transfer around dollars between each in order to settle their crypto transactions any time during the day or night. The network passed $1 trillion in cumulative payment volumes earlier this year, with one customer being the infamous FTX, whose founder, Sam Bankman-Fried, is now disgraced.

"I'm really sorry, again, that we ended up here. Hopefully, things can find a way to recover," Bankman-Fried, nicknamed the 'King of Crypto', wrote on Twitter on Friday. "I was shocked to see things unravel the way they did."

Bankman-Fried was one of the stars in the crypto field, drawing comparisons to investment magnate Warren Buffett. His net worth used to be over $15 billion.

Bankman-Fried tried to organize a bailout but failed - this left FTX struggling to raise billions of dollars and many customers unable to retain their money.

The win for Silvergate was that most of its profits were from deposits left by digital customers on its network, which amounted to 90% of the bank’s overall deposit base, almost $11.9 billion. They were later reinvested in securities to earn the $11.4 billion securities portfolio, which generated 2.2% over the three months to September.