Web3 Layoffs Surge: AI Excuses, Silent Firings, and Toxic Corporate Culture Exposed

Woofun AI reports that the Web 3.0 sector is currently enduring a severe contraction, characterized by widespread layoffs that are officially attributed to artificial intelligence but are fundamentally driven by financial distress and toxic corporate governance. While public narratives emphasize technological efficiency, the underlying reality involves silent terminations, immediate revocation of system access, and a systemic avoidance of compensation, exposing a deep structural rot within the industry’s leading platforms.

The broader technological landscape provides the statistical backdrop for this phenomenon. In the first half of 2026, the U.S. tech industry recorded nearly 140,000 job cuts. Major entities such as Amazon reduced their workforce by 9%, while Meta Platforms eliminated 10% of its staff. The stated rationale for these reductions was uniform: AI is changing everything, necessitating operational streamlining. By 2026, over 56% of layoff cases explicitly cited AI, automation, or machine learning as the primary cause. For four consecutive months, AI remained the top cited reason for layoffs in U.S. companies.

However, a critical contradiction exists: nearly 60% of companies admit that they frame their layoffs or slowed hiring as being "driven by AI," when the real cause is financial pressure. This trend extends beyond Silicon Valley, reshaping employment landscapes globally. The Web 3.0 sector, sitting at the intersection of technology and finance, has been particularly hard hit. Large-scale layoffs have persisted for over half a year, marked by intense speed and severity.

Recent months have seen a flood of news regarding the closure of top trading platforms, team reorganizations, and high staff turnover across X Corp, Reddit, Xiaohongshu, MaiMai, and industry Slack channels. BitMEX, once a dominant force, has largely faded from the mainstream spotlight, while smaller platforms are either exiting the market or scaling back operations. With talent and attention diverted to the AI industry, layoffs in the Web 3.0 sector appear inevitable, yet the methods employed reveal a darker intent than mere efficiency.

The experience of Kevin illustrates the deceptive nature of these terminations. He received his termination notice with only three days left until his last day. Kevin had previously worked at several large internet companies before being attracted by the high salaries and appealing narratives of the Web 3.0 sector, leading him to join a top trading platform. He later discovered that his departure had been decided more than one month earlier. During this period, he sensed no signs of impending layoffs. His work continued as usual, meetings were held as scheduled, and messages were sent regularly.

It was not until HR approached him that he learned of the decision, which cited no valid reason or performance issues. The sword of Damocles had hung over his head invisibly. In retrospect, the only clue might have been that two members of his original team of ten had already left before him. At the time, everyone claimed it was because they "weren’t a good fit" or "were looking for easier jobs." "Looking back, it might have been then that they started pushing them to leave,' Kevin told Zangsheng BeatZ. This pattern suggests a deliberate strategy of gradual attrition disguised as voluntary departure.

Richard’s case demonstrates an even more extreme approach to termination. After spending nine years as a full-time father, he returned to work and secured a position at a mid-sized crypto trading platform.

However, he and many of his colleagues were soon laid off. According to Richard, one morning, when he turned on his computer to prepare for work, he discovered that his system access had been revoked. Initially suspecting a technical issue, he checked the work group and saw around forty colleagues asking the same question: "Why can’t I log in to my account either?" No one knew what was happening. Panic spread through the group chat as employees looked at each other in fear.

Hours later, they received a cold layoff notice via private email, effective immediately. The situation was exacerbated by a prior hint from his supervisor that one of his development colleagues "might need to be reassigned." Richard attempted to help this colleague stay by rearranging tasks and proving the person’s irreplaceability. But before he could submit a plan, both of them ended up getting laid off. This instant revocation of access serves to disorient employees and prevent organized resistance or immediate claims for rights.

Xiao Yu’s account further elucidates the industry-wide tactics employed during these purges. She described a similar layoff scenario to Zangsheng BeatZ, noting that the first step at her previous company was to disable employees’ Slack accounts and cut off their email access. 'Whenever we saw someone suddenly disappear from Slack, we would rush to the private chat channels, competing to send our phone numbers and LinkedIn links,' Xiao Yu said. "Because we didn’t know who would be next to get laid off, everyone wanted to maintain contact while they still could."

When layoffs finally came for her, her manager messaged her through Slack, asking if she had time for a call. "Before I could reply, all my access rights were revoked." This method ensures that employees are isolated before they can communicate with peers or seek external advice. Kevin revealed that in the months after he left, the team continued to lay off employees, leaving only two people remaining. His trading platform reportedly laid off 10% of its staff every quarter, resulting in a total of 40% layoffs over the year. Coinbase announced in May that it would lay off around 700 people globally, describing it as an 'AI-driven restructuring" with a rate of about 14%.

However, the reality on the ground was far more severe.

Woofun AI data shows that the case of Coinbase in India exposes the cost rationalizations behind these figures. According to Zangsheng BeatZ, which obtained information from insiders, Coinbase’s office in India was hit much harder than the public 14% figure suggests. Former employees stated that around 90% of the staff in the Indian office had left, affecting all business departments, not just sales. Only a few of the best engineers were invited to move to Canada to continue working there.

The main reasons for the large-scale layoffs in the Indian office were high costs and a significant time difference from the U.S. Coinbase pays Indian SDE2 (mid-level engineers) around 7.5 million rupees, equivalent to about 110,000 Canadian dollars, which is comparable to the salary levels of mid-level engineers in Canada. In many high-paying tech companies, Indian architects even earn more than their counterparts in the EU. This disparity makes Indian offices prime targets for cost-cutting.

BitMart, another trading platform that closed down recently, saw entire departments eliminated starting in May.

Additionally, it is no coincidence that many trading platforms choose to conduct layoffs at specific times. According to Zangsheng BeatZ, around June 30th is a peak period for layoffs in the industry. The reason is simple: new financial reports need to be released in July, and these figures are meant to be shown to investors. By laying off a group of people and cutting expenses, the profit and loss statement looks much better. For trading platform management, layoffs are not just about reducing costs; they’re also a form of financial narrative management. In front of investors, a streamlined report is far more persuasive than any explanation.

Compensation avoidance is a central theme in these layoff strategies. Many trading platforms have reported that employees who failed to reach agreements with HR regarding compensation were immediately designated as having their last day and had their system access revoked. Zangsheng BeatZ learned from insiders that operational and product roles, since they work in offline or overseas offices, still receive proper handover time and compensation during layoffs.

'But since many technical roles are remote, they just fire you right away, quickly, without it affecting them much.' This is because many IT workers are based in China, while the trading platforms are registered overseas. 'You’re not there, so the personal cost of dealing with you is high. It’s just that amount of money, which doesn’t significantly impact life, so most people don’t want to or can’t complain too much.' Even with a few days of buffer time, employees’ situations aren’t easy.

When HR discussed resignation procedures, they asked Kevin to fill in the reason for leaving in the system and advised him not to choose 'fired by the company." "They would say that if you choose that, background checks won’t go through in your favor, and they’ll speak ill of you. So they force you to choose a personal reason for leaving." If you choose a personal reason, the company doesn’t have to pay any additional compensation.

Kevin ultimately didn’t receive any severance; the company only settled his salary and overtime pay up to his last day. Reflecting on it later, Kevin felt that there were some signs before he was laid off that he hadn’t recognized at the time. For example, working relationships with his direct supervisor started to become strained, and it was obvious that the supervisor didn’t like him as much anymore. But in an organization that operates at full speed every day, such subtle changes are easily overlooked until the moment it’s too late.

Surveillance and arbitrary performance metrics are used to justify these dismissals. During periods of large-scale layoffs, trading platforms try every means possible to make layoffs seem like something else. For instance, Zangsheng BeatZ heard from several interviewees that top trading platforms provide computers to employees before they start working. These computers come equipped with strict monitoring systems that track employees’ keyboard input frequency and mouse click behavior, with this data used in performance evaluations.

It is said that an employee at one trading platform was fired the next day after using the company-provided computer to watch some iQiyi shows for a while. Another common practice is to set almost unattainable KPIs for employees, and then dismiss them after the evaluation with reasons like "poor performance" or "not meeting company standards." In this way, layoffs are disguised as legitimate performance-based dismissals, allowing companies to avoid paying extra compensation. A former employee of a trading platform revealed on X Corp that during a layoff period, the platform held regular tests on "Web 3.

0 industry knowledge" and forced it to be included in KPI evaluations. If employees failed the tests, they risked being fired immediately. This massive wave of layoffs hit just as swiftly and violently as a tornado. But due to the long-term environment of heavy surveillance, everyone tacitly avoided talking about the obvious problems. The use of such tools creates a climate of fear where productivity is measured by activity rather than output, and loyalty is tested through constant monitoring.

The psychological toll on survivors is profound, creating a toxic work atmosphere. Compared to those who were simply fired, those who stayed weren’t necessarily luckier. Xiao Yu said that after each round of layoffs, the survivors would even envy those who had left, because at least they had already faced the consequences. Those who stayed lived like birds on tenterhooks every day, never knowing if they’d be next. Since layoffs started, she could clearly feel that the work atmosphere became extremely negative, filled with an indescribable sense of despair, making it hard to muster any enthusiasm for work.

Richard also mentioned subtle changes in the work atmosphere during layoffs. Although the work pace was fast, intense, and product iterations were frequent before, most of the time, people were focused on actual work, such as product updates and feature improvements. But now, the busyness served different purposes—mostly to meet the fabricated goals set by management. The company tightened its evaluation mechanisms, requiring employees to report in on time and holding more meetings than before. The "stand-up meeting" culture in trading platforms was taken to extremes during layoffs.

The original intention of stand-up meetings was to keep them short, as standing meetings are uncomfortable, so people would talk briefly. But according to Richard, at his trading platform, what was originally meant to improve efficiency became a source of exhaustion: there were two stand-up meetings per day, yet still, no one knew exactly which direction the product should go. Three project managers changed in half a year, and the product management team was eventually left almost empty. Many people had ongoing projects, but because key personnel were suddenly fired within a day, sometimes even just minutes before a meeting, these projects had to be halted abruptly.

Richard mentioned that his trading platform even had outsourced teams, and these outsourced workers earned significantly more than regular employees. It wasn’t until Richard talked to two colleagues face-to-face that he found out the reason: senior executives had withheld employees’ salary increases for two years. Richard believes that management doesn’t care about losing control of costs because what really matters to them isn’t technology or products, but power and control.

Cultural clashes and management power struggles further exacerbate the toxicity. Kevin felt the same way. He increasingly saw his trading platform as a declining state-owned enterprise. Against the backdrop of frequent security incidents across the crypto trading platform industry, the technical teams not only didn’t receive more resources but also became overly cautious: they focused on avoiding mistakes rather than striving for success. 'Everyone is afraid to take risks; they just want their work to be error-free.

It’s completely like working in a state-owned enterprise,' Kevin said. Before being laid off, John, who grew up abroad, had long lost patience with such a work environment. From the moment he joined the company, he could tell that the company had a strong "Chinese culture." Chat records, JIRA entries, meeting minutes—all were in Chinese. Foreign employees who weren’t good at Chinese felt excluded. The work atmosphere was extremely strict, the pace was fast, and there was a performance evaluation every quarter.

Since employees were distributed in different time zones, working outside normal hours was common. John mentioned that his team’s weekly stand-up meetings were scheduled on Sunday evenings, "ending my weekend plans early." His QA testing colleague, who was in the U.S. time zone, often sent messages at 11 p.m. "We always had to be on call 24/7," John said, noting that he frequently saw colleagues submitting code at 2 a.m. on Saturdays. "There was no balance between work and life here; the rhythm was more like work, then life, then more work."

Richard joined the company during its peak years and witnessed its decline firsthand. What troubled him the most was the "power struggles" among the company’s management, which were more blatant and chaotic than other office politics. The partners in his company suffered from a serious trust crisis due to government investigations and potential lawsuits. One CTO/CFO believed they had been deceived by the other partners or hadn’t received enough support when facing government issues. Eventually, the partners parted ways and declared separation.

One group formed a "board of directors" with their core team and a senior employee to start a new company that became the actual developer of the old products. Those who were once friends turned into clients within just a month. By February, the new company was launching two new products per week. All this happened around the time Richard resigned. Lower-level employees had no say in these high-level power struggles and became victims of internal conflicts and turmoil. In the Web 3.0 industry, many project founders and even trading platform CEOs are merely figures on the surface.

This is an open secret within the industry, known to almost all practitioners. The real decision-makers often remain hidden behind the scenes, and the people on the surface first need qualities like loyalty, not innovation or technical skills. 'A toxic culture is transmitted from top to bottom. Those who survive in this system are usually like that. If you aim to move up, you’ll inevitably be transformed by this environment." This marks a systemic failure where governance is replaced by personal allegiance, rendering technical merit irrelevant in the face of political maneuvering.