Coinsquare lays off 24 percent of staff amid turbulent crypto market, shifted focus to regulation

The cuts follow hiring sprees that took place across the crypto space last year.

Coinsquare has joined the increasing number of tech companies and crypto firms making layoffs among tougher market conditions.

The Toronto-based startup confirmed to BetaKit that it has laid off about 24 percent of its employees, which included contract workers. Coinsquare has seen its headcount reduced from 125 employees prior to the layoffs to approximately 95 workers now. The company also introduced a pay cut for its executives, though declined to disclose any further details.

Coinsquare CEO Martin Piszel, who took over the reins one year ago alongside an exec shakeup, told BetaKit that the cuts were related to both market conditions as well as a stronger focus on becoming a regulated crypto exchange.

Founded in 2014, Coinsquare’s crypto trading platform allows users to buy, sell, and trade cryptocurrencies like Bitcoin and Ethereum through its QuickTrade mobile app with no commissions.

Piszel told BetaKit that Coinsquare has not been immune to the broader crypto crash that has seen many of the big players in crypto exchanges make staff cuts already. Gemini, Crypto.com, and Coinbase have all made layoffs, which have also affected Canadian employees. Wealthsimple laid off approximately 13 percent of its staff in June, nearly a week after it was revealed that the company had enacted a hiring freeze. WonderFi, which has been consolidating its way to regulation, also made layoffs in recent months.

The layoffs are a reflection of the massive hiring spree that many crypto companies went on last year as the crypto market boomed and saw increased interest from institutional investors.

Coinsquare was no different. Piszel noted that Coinsquare staffed up last year, but as the crypto market has fallen, the company has seen trading volumes decrease.

Since May of this year when crypto began to fall, companies from across the crypto landscape — from exchanges to lenders — have suffered as a result, including the likes of Terra and Celsius.

However, Piszel argued that one of Coinsquare’s reasons for layoffs was different from its competitors. The CEO noted that Coinsquare has been focused on becoming a regulated crypto investment dealer in Canada, and that this staff reduction was related to “retooling” the company to ensure it has the skillsets to deal with the regulatory market.

Following its 2020 settlement with the Ontario Securities Commission (OSC) in relation to market manipulation, Coinsquare has been working to become a regulated investment dealer and marketplace operator.

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Piszel noted that Coinsquare has been working with regulators for the past 18 months in the hopes of becoming “the first fully-regulated crypto-centric investment dealer in Canada.” He said he expects to see those efforts come to fruition sometime in August.

“Our relationships with regulators are excellent, I would say, at this point in time,” the CEO argued.

Piszel was brought on to Coinsquare for just that reason. He brought experience from Canadian trading platform Tradelogiq, and CIBC World Markets. He also co-founded Alpha ATS, which was later sold to the Toronto Stock Exchange. Piszel in turn created a new executive team that includes individuals with experience in the regulatory landscape, including IIROC (Investment Industry Regulatory Organization of Canada) and the Alberta Securities Commission.

“We have brought in completely different skill sets for the firm that have come from that regulated industry to make sure that once we are regulated, we stay regulated,” said Piszel.

But Coinsquare’s regulation efforts have not been smooth sailing. Up until as recently as last year, Coinsquare indicated that it had reapplied to IIROC as well as the OSC for registration as an investment dealer and marketplace operator. In the interview regarding the layoffs, Piszel stated that Coinsqare is now focused on registering solely with IIROC. The move, he said, would differentiate Coinsquare from other exchanges that have received two-year exemptions, claiming that Coinsqaure would be ​​“the first fully-regulated crypto-centric investment dealer in Canada,” if approved.

Canada has seen a slew of crypto firms work with regulators, and many exchanges have received exemptions in order to operate as restricted dealers for a pilot period of two years.

“We decided to skip the restricted dealer part and go direct to the heavy lifting, which is the IIROC piece,” Piszel said, noting that the decision to change course was in part due to Coinsquare’s history with the OSC.

Coinsqare’s work to become regulated is in line with the 2021 guidance from the Canadian Securities Administration, which required crypto firms to register an investment dealer and become a member of IIROC.

In addition to becoming regulated, Coinsquare also focused much of its efforts over the last year to switch over to a new platform. Piszel said that work has now been completed, which also led to Coinsquare deciding to reduce its headcount.

This is not the first time that Coinsquare has made layoffs. Under its previous management, Coinsquare laid off a significant portion of the company in 2019 citing a volatile and unpredictable market.

Despite the market volatility and recent layoffs, Piszel said Coinsquare is on a growth trajectory and is well capitalized. He cited a financing round that the company raised last year, which came in addition to Mogo buying a significant portion of the company. Piszel refused to disclose the details of that funding round.

Piszel emphasized that, moving forward, Coinsquare is 100 percent focused on becoming regulated.

“We’re right-sizing so that we can … be a consolidator in this market as other firms have financial difficulties,” he said. “There’s going to be winners and losers, so I think we want to be … more on the winning side. We’re a well-capitalized company and we’re getting ready to take the next leg up.”

Meagan Simpson

Meagan Simpson

Meagan is the Associate Editor for BetaKit. A tech writer that is super proud to showcase the Canadian tech scene. Background in almost every type of journalism from sports to politics. Podcast and Harry Potter nerd, photographer and crazy cat lady.

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