Blockchain co First to lay off most employees

Ran Goldshtein Photo; Amit Payis Photoganim

The cryptocurrency market crash is leading First Digital Assets Group to look towards new horizons.

The cryptocurrency market's turbulent winter is leaving its mark, with the damage extending to the Israeli blockchain sector. Sources inform "Globes" that First Digital Assets Group, the blockchain group founded by Yariv Gilat, Ran "Goldi" Goldshtein, and Etai Raz, has decided "to rethink its policy" and embark on restructuring, including extensive layoffs.

As part of the comprehensive change that First Digital Assets will undergo, its research company, One Alpha, will be closed down. Four of the group's other companies - K1, Stamina, Titan, and Knox - will be merged into the parent company. First Digital Assets confirmed this report to "Globes."

According to information obtained by "Globes" from sources familiar with the group's business, First Digital Assets' restructuring will include laying off most of its employees in the near future. The group declined to comment about the extent of its layoffs, but it appears that the layoffs have already begun. Until recently, First Digital Assets, founded in 2017, was one of the largest blockchain companies in Israel with 65 employees, 60 of them Israelis in the group's offices in HaShahar Tower in Givatayim.

First Digital Assets told "Globes," The cryptocurrencies market experienced an earthquake last year, which forces us to be brave and consider First Digital Assets' various activities. We believe strongly in the sector. Fortunately, we have raised a large sum that remains in the company treasury, together with the vast experience we gained and the partnerships we created. We are therefore focusing on our liquidity activity, which continues to be fruitful, while at the same time channeling our development efforts to creating new solutions in blockchain, which we believe is the technology of the future."

The group raised $21 million

Although the group's founders, managers, and most of its employees are Israelis, the company is registered in Gibraltar, not Israel, probably for tax and regulatory reasons. The three leading partners in the company are chairperson Gilat, CEO Goldshtein, and COO Raz.

Gilat is a veteran angel investor and manager in Israeli technology companies. He was CEO of algo-trading company Final, and is still one of its owners. He was also among the leading shareholders in software company Whitesmoke Israel Advanced Technologies. Gilat is currently a management member at technology group Songo, among whose subsidiaries are Novelty Media, VidRide, Predicto, Brandcrunch, and Liberdy. He is also chairperson of Simplex, which clears digital currency transactions. Goldshtein formerly managed algo-trading company Maximize.

Among First Digital Assets investors are Apax Partners founder Ronald Cohen, the Mangrove fund, German-Israeli fund TargetGlobal, the Scale-Up Crypto Capital fund, and iAngels, controlled by Shelly Hod Moyal and Mor Assia. First Digital Assets has raised $21 million to date.

Wave of blockchain sector layoffs

Before First Digital Assets' restructuring, the group had five subsidiaries: K1, which provides digital currency trading services to venture capital funds, eligible investors, and blockchain companies; Tital, which provided secure digital wallet services to companies and investment institutions; Knox, which provided safe deposit-box service for large amounts for digital currencies; Stamina, which specialized in devising financial instruments (hedge funds, exchange traded funds, etc.) that facilitated blockchain exposure for investors; and OneAlpha, led by Yaniv Feldman, which provided research, consultation, and information services in blockchain to financial concerns.

Following First Digital Assets' restructuring, OneAlpha's activity was closed down and Feldman left the company. The activity of the other four subsidiaries will be merged into the parent company, and will continue on a smaller scale.

First Digital Assets' streamlining is the latest in the series of cutbacks in the Israeli blockchain sector, following a wave of companies that closed down and laid off their employees, as reported in "Globes" in late 2018.

Chinese bitcoin mining company Bitmain closed down its development center in Ra'anana last December and laid off the 23 employees there, headed by Gadi Glikberg. Another company that closed down its activity and laid off its employees in Israel late last year is Moshe Hogeg's Stox, founder of investment company Singulariteam and owner of the Beitar Jerusalem soccer club.

As reported by "Globes," a Chinese investor recently filed suit against Stox and Hogeg in the Tel Aviv District Court. The investor alleges that Stox's ICO was a "well-planned sting." Hogeg's larger blockchain startup, Sirin Labs, also recent laid off employees, shortly before launching its Finney blockchain phone.

Published by Globes, Israel business news - en.globes.co.il - on March 4, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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Ran Goldshtein Photo; Amit Payis Photoganim
Ran Goldshtein Photo; Amit Payis Photoganim
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