Lemon Cash, an Argentinian crypto exchange with operations in Brazil, cut 38% of its workforce – around 100 employees – this Thursday (24th), citing the sector’s challenging environment and the lack of a clear recovery horizon. in the venture capital market.
The offices in Argentina and Brazil were affected, CEO Marcelo Cavazzoli said in an interview. At the beginning of the year, when it opened a branch in Brazilian territory, the company said it would hire 60 people in the country by the end of this year.
“We don’t know when the venture capital market will recover, and even less so for a company in the hypergrowth stage between a series A and a series C,” said Cavazzoli.
Lemon’s cut comes in the wake of layoffs made by other companies in the sector. In September, 2TM, which controls Mercado Bitcoin, the largest Brazilian exchange by valuation, laid off 15% of its employee base (about 100 professionals).
In May, Argentina-based Buenbit laid off 45% of its staff (around 80 employees). Bitso, a Mexican exchange, also laid off 80 employees that month.
In July 2021, Lemon raised $16.3 million in a series A investment round led by British fund Kingsway Capital. The company expanded the round, adding $27.8 million and bringing the total to $44.1 million, Cavazzoli said.
“This extension gives us the backbone to face the (crypto) winter that we see coming at an investment level,” he said. “We do not depend on more investments for the coming years. If the market recovers sooner, great, but it’s not something we’re going to chase.”
Lemon planned to apply almost all of the value to its expansion in Brazil, where it opened operations earlier this year. Given the current context, its entry into the South American country will be “more strategic and niche”, said Cavazzoli. The brokerage put expansion plans for Chile, Colombia, Ecuador, Peru and Uruguay until the end of 2022 on the back burner.
On November 3, following the revelations by CoinDesk, partner of InfoMoneyregarding the financial ties between bankrupt exchange FTX and its sister company Alameda Reserch, Lemon withdrew nearly all of the funds it invested in Alameda, leaving only a “small amount” that FTX Ventures had invested in Lemon in its series extension A, Cavazzoli said, adding that he does not expect to recoup that money.
Cavazzoli added that Lemon released proof of bookings and proof of responsibilities certified by an auditor last week, while on Wednesday it added a booking test to its app. Soon, added the executive, Lemon will present a crypto-based proof of liability.
Furthermore, the platform also plans to use only fully decentralized protocols for its cryptocurrency income product, allowing users to choose their preferred platform to invest their assets, Cavazzoli said.
The company, founded in 2019, has 1.6 million users in Argentina and has already issued 760,000 prepaid crypto cards.