Consensys Cuts 20% of Workforce, Blames SEC ‘Power Abuse’ for Industry Struggles
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A major participant in the Ethereum ecosystem, Consensys, has announced large layoffs, reducing 20% of its workforce.
The corporation claims that the SEC has overreached its regulatory authority, and this decision comes amid ongoing litigation concerns with the SEC. The reductions affect 162 workers in different departments.
Consensys, a software provider for the Ethereum network, is eliminating 162 positions, or 20% of its workforce https://t.co/7HstzL4FAk
— Bloomberg Crypto (@crypto) October 29, 2024
The causes of layoffs
Consensys founder and CEO Joe Lubin explained the layoffs by pointing to both the difficult financial climate and ongoing regulatory conflicts. Due to claims that it was using its well-known MetaMask wallet service to operate as an unlicensed broker, the firm has been at conflict with the SEC.
The SEC’s actions, according to Lubin, are an “abuse of power” that impedes profitable investments and costs employment.
He said, “Such attacks from the U.S. government will end up costing many companies…many millions of dollars,” expressing irritation at Congress’s failure to address these regulatory issues.
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The broader macroeconomic conditions over the past year and ongoing regulatory uncertainty have created broad challenges for our industry, especially for US-based companies.
— Joseph Lubin (@ethereumJoseph) October 29, 2024
SEC Legal Battle
Consensys was accused by the SEC of breaking securities laws by providing services without the required registration, which sparked the dispute. Consensys has facilitated over 36 million cryptocurrency transactions since 2020, according to the SEC, with at least 5 million of those transactions including stocks.
Consensys responded by suing the SEC earlier this year, contesting the agency’s actions and attempting to make it clear that Ethereum is not a security.
The SEC’s action against Consensys is still pending, despite the court dismissing the company’s preemptive complaint this summer. The SEC had to withdraw from some of its investigations targeting Ethereum-using companies and developers as a result of Consensys’ tiny judicial triumph in spite of these obstacles.
The Wider Effects of Consensys
Lubin established Consensys in Brooklyn in 2014 as a development hub for projects based on Ethereum, the second-largest blockchain in the world behind Bitcoin. The business has been striving to create infrastructure tools to serve Ethereum since relocating its headquarters to Texas.
The business’s operations have been greatly damaged, nevertheless, by legal costs and regulatory constraints.
Several areas, including business operations and product development, will be impacted by the layoffs. The decision, according to Lubin, was a “tough but prudent one” meant to simplify the business’s operations. Consensys has committed to expanded healthcare coverage, career support, and substantial severance payments to help individuals affected.
Industry Reaction
The SEC’s concerns about Consensys are indicative of a larger attitude inside the cryptocurrency sector. According to a number of industry professionals, there are legal ambiguities because the SEC has not issued clear regulatory standards.
The current securities regulations are unambiguous, according to SEC Chair Gary Gensler, and the agency has filed litigation against a number of cryptocurrency companies, including well-known companies like Coinbase, Grayscale, Kraken, and Uniswap.
Each of these businesses has either sued the SEC or stated plans to do so, demonstrating the industry’s general dissatisfaction.
A message from our CEO @ethereumjoseph on the tough decision that Consensys has made today to streamline operations and position ourselves for sustainable growth and innovation while enduring a challenging regulatory and macroeconomic landscape.
This transition impacts 20% of… https://t.co/DTY6wDL3QJ
— Consensys (@Consensys) October 29, 2024
Plans for the Future
In accordance with blockchain ideas, Consensys hopes to transition from a typical business into a decentralized “network state” notwithstanding the layoffs. Lubin underlined that despite regulatory obstacles, Consensys is committed to moving forward and intends to expedite its adoption of this new approach.
