• Wed. Nov 29th, 2023

Chia Network Fires a Third of Its Staff Because It Lost a Banker, Which Delays Its Plans to Go Public

Phillip Bryant

ByPhillip Bryant

Oct 3, 2023

Chia Network has recently followed the prevailing industry trend of cryptocurrency firms reducing their workforce. The company has cited the termination of its banking partnership with Credit Suisse as the primary reason for a significant setback in becoming a publicly listed entity, resulting in substantial financial implications.

The organization has recently announced the acquisition of a new banking institution. However, uncertainty persists regarding the duration of the Securities and Exchange Commission’s review process about the request above.

Chia Network Laid off One-Third of the Employees

Chia Network has recently reduced its workforce to approximately one-third of its employees. This decision was made in light of the company’s objective to restore a previously severed banking relationship, resulting in a setback to Chia’s anticipated expeditious progression towards becoming a publicly listed entity.

The open-source software business, known for its commitment to adhering to U.S. regulations to secure its listing on a U.S. exchange, has communicated to a subset of its workforce that their employment will be terminated. Specifically, 24 out of 70 employees have been informed of this development.

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The action above transpires after Chia, an enterprise established by Bram Cohen, the progenitor of BitTorrent, applied to the Securities and Exchange Commission (SEC) to initiate its initial public offering (IPO) endeavor. This course of action was impeded to some extent by the insolvency of its financial institution, Credit Suisse.

Regrettably, it is anticipated that several highly skilled individuals will be departing our organization due to the adverse circumstances we have faced in securing funding during the preceding months. Chia’s CEO, Gene Hoffman, has indicated that the workforce reductions will primarily impact roles related to the facilitation of the ecosystem, as opposed to those involved in sales and marketing endeavors. The decision to allocate the necessary resources for the company’s sustained operations was challenging.

As the cryptocurrency company undergoes a reduction in workforce, it is concurrently exploring the possibility of liquidating its inventory of its proprietary token, XCH, as stated by Hoffman. The accumulation of 21 million XCH tokens signifies a substantial portion, accounting for approximately 75% of the total coin supply. Among these, nearly 9 million tickets are currently in circulation. However, Hoffman has expressed the company’s intention to release only a restricted quantity of these tokens as a supplementary means of financing during the lead-up to its forthcoming initial public offering (IPO).

According to Hoffman’s statement during an interview with CoinDesk, it is evident that there are no plans to engage in significant sales.

Chia Still Has Resources Available

Within its organizational structure, Chia possesses an unburdened quantity of 2.6 million XCH, which can be readily divested. This holding would amount to a valuation of $70 million at the prevailing market price. However, it is essential to acknowledge that the value above may be subject to potential fluctuations resulting from substantial sales activity.

Due to the ambiguity surrounding the SEC’s classification criteria, Chia has refrained from engaging in token sales. However, Hoffman asserts that recent legal proceedings involving Ripple and Terraform Labs have illustrated that a meticulously decentralized token can meet the existing benchmarks for delineating a digital commodity.

Regarding the initial public offering (IPO) matter, Mr. Hoffman has conveyed that the company, in collaboration with the World Bank and engaged in the tokenization of carbon credits, has successfully established a fresh banking partnership with a reputable financial institution based in the United States towards the conclusion of the previous week. The individual opted not to disclose the financial institution’s name, citing the ongoing preliminary nature of the negotiations with the Securities and Exchange Commission (SEC).

Despite adding a new banking institution and implementing cost-cutting measures, Chia is confronted with an indeterminate regulatory procedure, as the regulatory authority has been engaged in legal battles with numerous other cryptocurrency enterprises in federal court.

Amidst the ongoing legal conflict between the industry and the agency, Chia has endeavored to navigate a delicate path to align with the expectations set forth by U.S. regulators. The layer-one provider finds itself situated in a transitional space between Prometheum Inc., a contentious startup endeavoring to establish its position as a Securities and Exchange Commission (SEC)-approved trading firm, and the majority of the cryptocurrency industry, which contends that regulatory constraints render compliance for digital asset enterprises unfeasible.

The engagement with the Securities and Exchange Commission (SEC) has been characterized by typicality, a noteworthy observation within this particular domain,” stated Hoffman. He further acknowledged the challenge of accurately estimating the duration of the ongoing procedure. It is anticipated that obtaining approval from the Securities and Exchange Commission (SEC) may exceed the standard time for entities similar to ours.

Coinbase Inc.’s prior approval by the SEC for its public listing was subsequently accompanied by an enforcement action, wherein the SEC alleged the company’s violation of securities law by operating as an unregistered exchange.

The regulatory body may encounter internal obstacles in the form of potential disruptions arising from a possible cessation of federal government operations due to a legislative deadlock concerning the United States budget. If such a scenario were to transpire, it was revealed during recent SEC Chair Gary Gensler testimony that Chia’s filing would be entrusted to a limited workforce.

Phillip Bryant

Phillip Bryant

Phillip Bryant, an esteemed writer in the financial field, imparts his extensive knowledge of currency markets to the readers of Main Crypto News. With a wealth of experience in international finance and a keen sense of market trends, Bryant offers timely and perceptive analysis of foreign exchange, keeping readers well-informed.

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