Chia Network said the loss of its financial partner Credit Suisse resulted in a costly delay of its bid to float as a public business, joining the steady trend of cryptocurrency companies laying off employees.
The Securities and Exchange Commission’s examination of the business’s request is still unknown, despite the fact that the company claimed to have obtained a new bank last week.
According to the firm, Chia Network reduced its employment by more than a third today as it worked to rebuild a broken banking relationship. This further slowed down what Chia had believed would be a quick road to going public.
The open-source software company, which had previously taken pleasure in finding a U.S.-compliant path to establishing its listing on a U.S. exchange, today told 26 of its 70 employees that their positions would be terminated. This action was taken five months after Bram Cohen, the creator of BitTorrent,-whose company Chia was founded-filed with the Securities and Exchange Commission (SEC) to begin the process of going public, a procedure that was hampered in part by the failure of its bank, Credit Suisse.
“Unfortunately, we’re going to lose some great people as we’ve endured a challenging funding environment over the past several months,” said Chia CEO
Gene Hoffman claimed that the “ecosystem support” component of the layoffs is being prioritised over sales and marketing. Giving the company the necessary runway was a difficult choice.
According to Hoffman, the cryptocurrency startup is aiming to sell its stockpile of its own token, XCH, while it reduces its workforce. With over 9 million of those coins already in circulation, the mountain of 21 million XCH represents nearly three-quarters of the total supply, but Hoffman stated that the company will only sell a small quantity as a fallback source of funding prior to its first public offering (IPO).
“Certainly, we’re not going to be selling even a material amount,” Hoffman said in an interview.
According to its structure, Chia possesses 2.6 million unencumbered XCH that it may easily sell for $70 million at the current price, however the value would unavoidably be impacted by mass selling. The price of XCH decreased 2.3% from the trading day’s high to $27.18 after the news broke.
Chia had never sold any of its tokens since it was unclear how the SEC would categorise them, but Hoffman claimed that recent legal disputes involving Terraform Labs and Ripple had shown that a carefully decentralised token can meet the criteria for being categorised as a digital commodity.
The company, which has been working with the World Bank and has tokenized carbon credits, gained a new financial arrangement with a U.S. institution at the end of last week, according to Hoffman, who also discussed the company’s IPO plans. He refused to say which bank it was, citing the early stages of the SEC negotiations.
Chia confronts an uncertain procedure with the regulator, which has been battling many other crypto startups in federal court, even with a new bank on board and lower costs.
Chia has attempted to tread a fine line in order to satisfy U.S. authorities while the majority of the industry is engaged in an open legal battle with the agency. This places the layer-one provider between Prometheum Inc., a contentious startup attempting to become an SEC-approved trading firm, and the majority of the rest of the crypto industry, which maintains that the regulators are making it impossible for businesses dealing in digital assets to comply.
According to Hoffman, “our interaction with the SEC has been quite normal, which is saying something in this space,” and that it’s hard to anticipate how long the process will take. “We’ve anticipated that it will take someone like us a little longer than average to get through the SEC.”
Although the SEC had previously given the all-ahead for Coinbase Inc. to go public, it later took enforcement action against the company, charging it with breaking the Securities Act by operating an unregistered exchange.
The agency may see delays of its own as a potential federal government shutdown brought on by a congressional dispute over the US budget approaches. According to Gary Gensler, the SEC Chair, Chia’s application would be handled by a “skeletal staff” if that occurs.