Melbourne crypto start-up CoinJar axes 20pc of workforce

The crypto contagion has hit Australia’s longest running bitcoin exchange, with CoinJar chief executive Asher Tan forced to lay off staff.

One of Australia’s largest cryptocurrency start-ups CoinJar has laid off 20 per cent of its global workforce, shedding 10 staff as deteriorating macroeconomic conditions and FTX’s collapse tear through the embattled sector.

CoinJar, which is based in Melbourne and was Australia’s first crypto exchange, is the latest crypto company to lay off workers joining Banxa, Immutable and Swyftx which have collectively shed dozens of staff in the past six months.

“Like many companies we’ve had to right-size parts of the business in response to poor market conditions,” CoinJar chief executive Asher Tan said.

The entrepreneur co-founded CoinJar with Ryan Zhou in 2013 and soon received funding from Blackbird Ventures, with the pair growing their company into one of Australia’s most trusted crypto brands, which its customers use to buy and sell cryptocurrencies including Bitcoin.

Mr Tan told The Australian earlier this month that CoinJar had some limited exposure to failed global cryptocurrency platform FTX as a trading partner.

The collapse of FTX month has flowed through to local projects and start-ups and at least one local crypto exchange with exposure to FTX, Digital Surge, was forced to suspend withdrawals, with customers still unable to access their funds.

Administrators of FTX’s local arm warned last week some Australian customers have lost “very significant” sums of money and that many are unlikely to see the return of their investment. FTX Express has $39m in its accounts and FTX Australia has $3m, the administrators have so far found.

FTX founder Sam Bankman-Fried on NBC's Meet the Press in September 2022. Source: YouTube

Until a short time ago one of the world’s largest cryptocurrency exchanges, FTX’s downfall has stunned the crypto industry and drawn comparisons to similar corporate failures like Enron and Lehman Brothers.

CoinJar has not paused any of its operations.

“While the industry assesses the impact of the situation, one thing for sure is there has been an erosion of trust in the industry,” Mr Tan told The Australian this month.

“Believers won’t be swayed having witnessed incidents like this both domestically and abroad. However as CoinJar strives to bring bitcoin and cryptocurrencies to a larger mainstream audience, it will be an uphill battle in gaining trust from people who are on the fence about cryptocurrency while this FTX incident is fresh in their minds.”

Mr Tan said in a further statement to customers that CoinJar held a small account balance with FTX to facilitate its OTC trading desk operations and client trades.

“This trading balance represented less than 1 per cent of our gross assets and did not include any customer funds. Appropriate hedging activities have been conducted to ensure that there is no further impact to our balance sheet. We have no exposure to FTT or Alameda Research,” he said in an email.

“CoinJar is a full reserve crypto platform and our customer assets are held 1:1 on an individual cryptoasset basis. At all times, at least 90 per cent of our customer assets are held in offline cold storage or with our custodians, BitGo and Fireblocks.

“We continually monitor our internal balances to ensure that customer assets are accounted for separately from our operational funds at all times. CoinJar is a fully fledged exchange with our own order book, custody procedures and settlement processes – not a brokerage for unregulated international players. We operate in two highly sophisticated markets – Australia and the UK – and are registered with AUSTRAC and the UK’s Financial Conduct Authority (for AML purposes).

“We believe in the cryptocurrency future and hope that we will continue to be part of your crypto journey.”