Lemon Cash, a crypto exchange with operations in Argentina and Brazil, cut 38% of its workforce – about 100 employees – on Thursday, citing the challenging industry environment and the lack of a clear recovery horizon in the venture capital market.
Both Argentine and Brazilian offices were affected, CEO Marcelo Cavazzoli said in an interview.
The job losses at Lemon trump those at other Latin crypto companies as they respond to the state of the industry. In May, Buenbit laid off 45% of its staff, some 80 employees, due to what the crypto exchange called the “global overhaul” in the tech industry. Bitso, another exchange, also laid off 80 employees in May.
“We do not know when the venture capital market will recover, and even less so for a company in a hyper growth stage between a Series A and a Series C,” Cavazzoli said.
In July 2021, Lemon raised $16.3 million in a Series A funding round led by British fund Kingsway Capital. The company has extended the round, adding $27.8 million and elevating the total to $44.1 million, Cavazzoli said Thursday.
“That extension gives us the backbone to get through the winter that we see coming at an investment level,” he said. “We're not dependent on more investment for the next few years. If the market recovers sooner, great, but it's not something we'll run after.”
Lemon had planned to deploy almost the entire amount on its expansion in Brazil. Given the current context, its move into the South American country will be “more strategic and niche,” Cavazzoli said. The exchange put plans to expand into Chile, Colombia, Ecuador, Peru and Uruguay by the end of 2022 on the back burner.
On Nov. 3, following CoinDesk’s revelations on the financial links between FTX and Alameda, Lemon withdrew nearly all of the funds it invested in Alameda Research, leaving only a “tiny amount” that FTX Ventures had invested in Lemon in its Series A extension, Cavazzoli said, adding that the exchange does not expect to recoup that money.
Cavazzoli said Lemon released a proof of reserves and a proof of liabilities certified by an auditor and a scribe last week, while on Wednesday it added a live booking test on its app. Coming soon, the executive added, Lemon will introduce a crypto-based proof of liabilities.
In addition, Lemon plans to use only fully decentralized protocols for its earn product, allowing users to choose their preferred protocol for investing their assets, Cavazzoli said.
The company, founded in 2019, has 1.6 million users in Argentina and already issued 760,000 prepaid crypto cards.