Michael Gronager, co-founder and chief executive officer of Chainalysis Inc., Photographer: Edwin Koo/Bloomberg
© 2022 Bloomberg Finance LP
Chainalysis is laying off approximately 150 employees, or slightly more than 15% of its staff of 900, CEO Michael Gronager told employees in an email Monday evening as the company broadens its retreat from the commercial market while concentrating on more stable government contracting.
This is the second round of cuts for the company, which was valued at $8.6 billion in 2022, this year as last year’s cryptocurrency decline limits commercial demand for its products. “This reorganization reflects our ongoing strategic shifts to balance our growth aspirations,” said Madeleine Kennedy, vice president of communications. “We are going to focus on profitability and maturity and to ensure that we are agile in light of evolving market forces.”
The majority of reductions will again come from marketing and business development teams focused on the private sector, whose jobs have become significantly more difficult in an environment where the price of bitcoin is down 60% from its all time high of $69,000 in November 2021.
This retreat has translated into dwindling trading revenue and blockchain activity, which reduces the need for Chainalysis products that help cryptocurrency exchanges and other companies identify illicit transactions and maintain regulatory compliance.
As a result the company had to reduce its growth expectations for the rest of this year, after growing 50% from mid 2022-mid 2023. Kennedy says that the firm has ample cash (though she would not provide concrete numbers) to ride out this bear market.
As the company moves further to the public sector, which already provides 70% of its revenue, it is looking to expand on the investigative power of its core offerings with an eye on the future needs of governments.
“The public sector still has a lot of way to go in creating a safe and regulated environment,” says Kennedy. “In addition to anti-money laundering regulations, there’s still lots of other regulatory issues like prudential soundness, market conduct, and consumer protection that need to be addressed.”
