BlockFi Seeks Urgent Approval for Employee Retention Plan
Bankrupt crypto lender BlockFi is willing to offer certain employees a 10% to 50% retention bonus as it seeks to prevent a mass employee exodus.
According to BlockFi Chief People Officer Megan Cromwell, BlockFi risks losing more talent, unless the court approves a retention petition filed on Nov. 28, 2022.
BlockFi Looks to Stem Employee Exodus
“While we felt these extensions prudent to allow for dialogue with the U.S. Trustee and the Committee, we have experienced both additional personnel loss and increased concern regarding the receipt (and timing) of retention payments,” Cromwell said in a 14-page witness declaration filing early on Jan. 23, 2023, which both the U.S. Trustee and the creditors’ committee have opposed.
Since the petition filing last November, 11 employees have left BlockFi.
FTX recently opposed BlockFi’s claim to Sam Bankman-Fried’s Robinhood shares, pledged as collateral for a BlockFi loan to FTX market maker Alameda Research. Later, the U.S. Department of Justice started the process to seize the shares.
Celsius and BlockFi Retention Schemes a Hot Topic
BlockFi is not alone in trying to retain top talent in the midst of bankruptcy proceedings.
Lender Celsius, which filed for bankruptcy in mid-2022, recently secured approval to pay staff assisting with the bankruptcy process. Similar to the graded BlockFi retention scheme, Celsius targeted retention payments for employees with salaries between $25,000 and $425,000. By early Dec. 2022, the company had lost about 200 employees.
Retention schemes of bankrupt crypto companies have been under the spotlight recently for draining critical liquidity.
FTX’s new CEO John J. Ray III and his staff have been criticized for charging exorbitant fees that could be used to reimburse bereft FTX customers who lost access to their crypto after the exchange paused withdrawals in the face of a sudden liquidity crisis on Nov. 11, 2022.
Gemini Lays Off a Further 10% of Staff
To potentially stave off insolvency, other companies have resorted to substantial job cuts.
The Information reported on Jan. 23 that Gemini exchange would cut 10% of its staff in another round of layoffs.
“It was our hope to avoid further reductions after this summer, however, persistent negative macroeconomic conditions and unprecedented fraud perpetuated by bad actors in our industry have left us with no other choice but to revise our outlook and further reduce headcount,” said the exchange’s co-founder Cameron Winklevoss in an internal staff message.
Winklevoss has been locked in a high-profile battle with bankrupt lender Genesis Global Capital for its alleged mismanagement of funds belonging to Gemini’s Earn clients.
Genesis used Earn customers’ funds to lend long and in turn, provided them with interest rates exceeding most banks. Gemini reportedly collected up to 4.29% of all interest earned for brokering the relationship between Earn customers and Genesis.
Genesis also recently reduced its headcount by 30% shortly before it filed for bankruptcy, while U.S. exchange Coinbase has laid off more than 2,000 workers in the last seven months.
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BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.