Crypto crash in Argentina: one of the main wallets fired a third of its staff

Lemon assures that he has financial support to not have business rounds for 3 years

Lemonone of the most used platforms in Argentina suffered the blow of the complex scenario of the ecosystem crypto and announced that it will reduce a third of its staff while implementing a plan to achieve the sustainability of the company without the need to attract new investments for the next 3 years.

The company informed 100 of its 260 employees today that they will not continue in the company. “We made this decision with pain because it is young and talented people who have joined the challenge of transforming this industry. Given the context that the technology industry is going through, we are forced to continue with a smaller team so that the company is sustainable and we do not have to depend on new rounds of investment for the next 3 years,” he said. Marcelo CavazzoliCEO and founder of Lemon a infobae.

The businessman pointed out that the reduction in personnel is not linked to the recent drop in FTXthe second most important exchange in the world, and that this episode “did not have any impact on users nor does it represent a significant amount” for the company.

During the first days of November, after the problems they faced FTX/Alameda, Lemon removed all user funds and removed them as an option for the service. FTX Ventures had also invested in Lemon during the Serie A extension, with a tiny percentage. Lemon decided to deposit in Alameda only an amount equal to what FTX Ventures invested and they do not expect to recover that investment,” the company said.

infobae

With 1.6 million users, 750,000 issued Visa cards and 3 transactions per second, Lemon was at the top of local exchanges offering the first dual wallet, to pay in pesos and in crypto. It expanded based on two attributes of its product: 2% cashback or reimbursement in Bitcoin for all purchases with its card and high rates of return, which reached 13% in DAI, a stablecoin tied to the dollar.

Lemon’s transformation seems to announce to the market that this business model applied by other Argentine crypto players (Belo, Buenbit, Bitso, SatoshiTango and others), based with different variants on the aggressive combination of cashback payments and high rates for leaving deposits I encrypt them as a way to achieve a critical mass of users, it is coming to its end.

The next model will not only not have as much financing as in the past but, after the fall of FTX, it will require more transparency. Cavazzoli admits that there is “a new cycle” in the crypto world: “To be sustainable, it is key to respond to a demand for greater transparency, both from users and investors. The focus is changing. Now, investors are asking you to build trust as well as innovation.”

At the same time that it is reducing its workforce, Lemon is changing its business in three different ways. The first of these is that it launched a live “Proof of Funds” within its app so that any user can verify every 10 minutes on the blockchain all the information about the reserves that Lemon has in custody of its users with amounts, networks and addresses. . “We are not asking you to believe us, but to believe the blockchain,” explained Cavazzoli, who admitted that Lemon suffered the withdrawal of funds during the critical weekend of the FTX crash but assured that this normalized a few days later. and that the company “was able to respond to all withdrawals without issue”.

This already implemented measure, “well received by users” according to Cavazzoli, will be complemented by the presentation, through the Argentine Chamber of Fintech, of “an open source project to raise the industry’s transparency standard.”

Marcelo Cavazzoli: "To be sustainable, it is essential to respond to a demand for greater transparency, both from users and investors"
Marcelo Cavazzoli: “To be sustainable, it is key to respond to a demand for greater transparency, both from users and investors”

The second aspect is that in order not to go to new investment rounds in three years, Lemon expanded Series A investments for USD 16.3 million in July 2021 led by Kingsway Capital and with the participation of Coinbase, Draper Associates and Draper Cygnus, among others. This year it closed an extension of that round for an additional USD 27.8 million, with some new investors such as DST Global, Valor Capital, GoodWater Capital, CMT Digital and Cadenza. Thus, it received a total of USD 44.1 million from its investors, one of the highest amounts for an Argentine company. “We have the back to face the uncertainty and move forward without new rounds of investment,” Cavazzoli explained.

The third aspect will be in your product. The 2% cashback in Bitcoin will only be for large users of your card, who consume $125,000 per month. The crypto deposit will have moderate returns. Ether will yield 1% per year while stablecoins (DAI, USDT, USDC) will be somewhat above 2%. As the clearest example that the crypto business model is changing, Lemon always paid 3.5% interest on Bitcoin and deposited it to his clients every Friday to make it more tempting. Starting November 28, Bitcoin deposited on the platform will no longer earn interest.

In May, at another critical moment in the crypto ecosystem after the collapse of UST/Terra, two other relevant companies in the local market had to reduce their staff. Bitso had to lay off 80 employees out of a total of 600 that it has in 35 countries. It was not officially reported how many of them worked in Argentina and it turned out that most of the dismissed worked in Mexico. Buenbit also had to shrink: it then fired some 80 people, 45% of its total employees.

Keep reading:

Crypto Crash: FTX Owes Over $3 Billion To Its Top 50 Creditors
Crypto fear in the local market: the most popular stablecoin in the City of Buenos Aires trembled, but resisted


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