"I've worked with many ambitious clients before, but Crypto.com is probably the most ambitious client I've ever worked with," said an advertising professional who has worked with the company in the past.
But as a downturn in the crypto market began in the late spring, virtually all crypto exchanges were forced to cope with less trading activity and lower trading volume. Crypto.com was hit especially hard; in terms of monthly spot trading volume, the firm had consistently ranked as a top-five crypto exchange as recently as March of this year, per data from CoinGecko and The Block. By late summer, it had fallen out of the top 10.
Underlying Crypto.com’s pricey marketing decisions was a strategy that appeared to be more concerned with making headlines than building a sustainable business, according to former and current employees at the company. Indeed, the firm’s “get big fast” approach is reminiscent of the numerous internet startups that poured staggering sums into marketing in the early aughts, only to fail when the dot-com bubble burst.
“They were just writing checks they could only cash when things were good,” said one former employee. “Funny money.”
Sponsorship deals that Crypto.com has quietly downsized include: a sponsorship with Angel City F.C., which has seen significant reductions in the amount of money that was supposed to be allocated to efforts including Web3 education and NFTs, a second former employee said. Lawyers for the Los Angeles-based women’s soccer club wrote to Crypto.com alleging the firm withheld payments and reneged on the deal, according to materials reviewed by Ad Age.
“While it is our policy to keep our deal points confidential, I can share that we enjoy our partnership and look forward to continuing working on and off the field to make an impact, including the continuation of our powerful financial literacy program,” wrote an Angel City F.C. spokesperson over email.
In another highly touted deal, Crypto.com became the global crypto partner of Twitch Rivals, Twitch’s esports league, but Crypto.com leadership decided in the late spring that it wanted to dissolve the deal, per internal communications reviewed by Ad Age. Both companies have since agreed to end the partnership by the end of 2022, a separate source with knowledge of the deal said. A Twitch spokesperson declined to comment for this story.
Other details about Crypto.com’s partnership reductions recently came to light when SportBusiness reported that the company pulled out of a five-year sponsorship of the UEFA Champions League, the most prestigious soccer tournament in Europe. The deal was ostensibly shuttered over regulatory concerns in France, Italy and the U.K. Crypto.com maintains separate partnerships with French soccer club Paris Saint-Germain, Italian soccer league Serie A and English-owned Aston Martin’s Formula One team.
The 2022 FIFA World Cup is Crypto.com’s marquee soccer partner, but the firm has quietly cut the number of hospitality packages it plans to issue to institutional clients, the second former employee said. These orders may have been reduced by as much as half, the first former employee said. Hospitality packages, which include deals on tickets, hotels and other benefits, are typically a primary obligation of sponsors in order to support the tournament’s operations.
Read: Crypto.com to sponsor 2022 World Cup
NFT drops—a core offering hyped in many of Crypto.com’s sponsorship deals—have also dried up in recent months. In the four months since layoffs began, the company has released just two official collections for all of its combined sports partnerships—compared to nine during the four previous months. Of course, the downturn in the greater NFT market has sapped demand for the tokens, but whether Crypto.com plans to hold off most drops until crypto winter subsides—a day that could be years away—remains unclear.
In response to each of the assertions mentioned above, a Crypto.com spokesperson wrote they are “factually incorrect,” but declined to provide additional details.
Meanwhile, Crypto.com has downsized efforts to attract new users to some of its ancillary products, like its Visa debit cards, and staking, which allows crypto investors to earn yields on their coins. The Visa card has seen reductions to merchant rebates and cash-back rates, while staking rewards for Crypto.com’s native blockchain token, CRO, have been cut by 20%.
“We don’t have a comment [on the Visa cards], everything to do with our incentives is published for both existing and new customers to see,” a Crypto.com spokesperson wrote in an email.
Read: How brands and agencies are reacting to NFT market downturn
Entire new marketing team ‘dismantled instantly’
As layoffs ensued, one of the Crypto.com teams to be targeted was a new brand creative studio, a group of at least 10 North American employees freshly poached from ad agencies and other advertising companies, according to multiple former employees.
The team was “dismantled instantly,” said the second former employee. Several of these team members were at the company for just four months, per their LinkedIn profiles. The vice president of the group was the only member not laid off with the rest, but they have since left the company as well.
The brand creative studio was supposed to help lead a shift away from Crypto.com having to depend on outside agencies to create its ads, said sources. Previous agencies the company collaborated with include Pereira O’Dell and Wieden+Kennedy. Crypto.com wanted to improve its capacity to churn out campaigns on short notice, as demonstrated by its Oscars ad—a national TV spot themed around the war in Ukraine, launched hardly a month after the onset of the invasion.
Read: Crypto.com's Oscars ad is a sobering plea for Ukraine
Other North American marketing staff cuts included a creative director, a content partnerships director, several members of a team in charge of sponsorships and the head of influencer marketing.
Meanwhile, global cuts were being made in departments across the company. In an office in Bulgaria that mainly focused on customer service, around 1,100 to 1,200 employees left between June and August, according to multiple former and current employees. These departures—the vast majority of which were layoffs—combined with others from around the world, amount to a rough total of just over 2,000 departures company-wide, or between 30% and 40% of Crypto.com’s pre-summer workforce, multiple former and current employees said.
Prior to the cuts, the firm had over 5,000 employees, multiple current employees confirmed. Roughly 45% of these employees were hired between 2020 and 2022, according to TheStreet. As of press time, the search result snippet for Crypto.com’s careers page still states that the company has over 4,000 employees.
Former and current employees confirmed that internal directories were removed and Slack channels were deleted, making it difficult for anyone—whether let go or not—to fully grasp the scale of retrenchments.
What happens next?
The irony is not lost that Crypto.com, by virtue of its suffix, is connected to a subset of online companies that dramatically blew up 20 years ago (Pets.com, Boo.com, etc.) in what became known as the “dot-com bubble.” The rise of crypto firms as a whole shares similarities with that of early-aughts dot-coms, including the reliance on a novel technological framework, huge flows of venture capital investment and massive marketing splashes culminating in Super Bowl ads.
“Like Pets.com, you have these massive, killer Super Bowl commercials, but then it’s like ‘And then what?’,” said Adam Jones, executive technology director at R/GA.
When early dot-com startups began to fail, marketing was typically the first area to undergo major cuts, along with slashes in headcount that often negated recent hiring waves. In many cases, complete shutdowns occurred not too long after.
Read: Dot-com Super Bowl ads are a warning to crypto brands
It is far too early to predict Crypto.com’s fate, but the firm has already fared worse than many of its competitors. Coinbase and FTX, both of which debuted ads in this year’s Super Bowl, remain in the top five of crypto exchanges by monthly spot trading volume; Crypto.com—formerly third—now sits at 11th, as of August 2022 data.
This disparity also manifests in the scale of layoffs. Coinbase, a public company, announced 18% cuts, and FTX, which has a comparatively lean headcount of 300 employees, has yet to announce a retrenchment.
The reasons for Crypto.com’s particularly steep slump in trading are myriad, but its massive marketing spend exacerbated its problems, according to Jones.
“I think that they were very confident in the markets and [thought] that if they just kept pushing harder, they could beat this cycle by volume,” he said. R/GA does not work with Crypto.com, Coinbase or FTX.
What happens next for crypto companies will largely be a result of macroeconomic conditions, whether instability among crypto firms can be contained and the duration of crypto winter. These forces have been the main source of headwinds across the industry.
Yet Crypto.com is also grappling with its own costly decisions. Fortune may favor the brave, but bravery has its limit.