Paxos cuts 20% of workforce despite having more than $500 million on balance sheet

Stablecoin issuer Paxos has laid off around 20% of its staff despite being in a solid financial position.

"We shared a difficult decision to reduce our employee headcount by ~20%. We communicated this news to all 65 impacted team members directly," Charles 'Chad' Cascarilla, co-founder and CEO of Paxos, wrote to employees in an email on Tuesday, a copy of which has been obtained by The Block. "This allows us to best execute on the massive opportunity ahead in tokenization and stablecoins. With more than $500 million on the balance sheet, we are in a very strong financial position to succeed."

A Paxos spokesperson confirmed the email contents to The Block when contacted.

Paxos has offered affected employees 13 weeks of severance pay, three months of subsidized health insurance, three months of outplacement support, and a two-year extension to exercise vested options, Cascarilla wrote in the email. Additionally, the company has provided second-quarter bonuses to those who were on a quarterly incentive program and payments and benefits to anyone with approved parental or medical leave in addition to the separation package, per the email.

As a result of the cuts, Paxos' revised headcount now stands between 200-300, a source with direct knowledge of the matter told The Block.

Paxos was valued at $2.4 billion when it raised a $300 million Series D funding round in 2021.

Paxos' increased focus on stablecoins

The layoffs come a week after Paxos launched a regulated yield-bearing stablecoin called Lift Dollar (USDL) from its UAE-based entity, Paxos International. The company now looks to double down on regulated stablecoins and tokenization, per the email.

"Stablecoins will 10x in the coming years and serve as the fulcrum for opening the financial system through tokenization," Cascarilla wrote. "Launching and scaling new regulated tokens takes time. We will continue to consolidate focus on our core offering and de-prioritize adjacencies."

By de-prioritizing adjacencies, Cascarilla referred to Paxos' efforts around new products and features that the company initially considered interesting for the market but has now decided to de-prioritize, the source said.

Paxos has become the second crypto company in recent weeks to cut staff despite being in a financially strong position. Last week, The Block reported MoonPay laid off 10% of its staff, or about 30 people, despite having "years of runway."