Paradigm, the crypto VC firm known for an eclectic range of investments that included collapsed crypto exchange FTX, is cutting its employees’ salaries by 15%, citing dismal market conditions.

“Post FTX’s collapse, it is clear the contagion is deep and wide and like many of our clients and peers, we are not immune,” the company said in a statement posted to Twitter on Thursday. “Salary cuts reduce the need for layoffs seen across the ecosystem and have a lesser impact on org momentum.”

The firm has invested heavily across the crypto ecosystem, financing Ethereum scaling project Optimism, Solana-based NFT marketplace Magic Eden, as well as Coinbase and Cosmos.

In November 2021, it announced a $2.5 billion New Venture Fund, then the industry’s largest. As of November, the firm’s assets under management totaled around $14 billion.

Paradigm has also poured money into a number of definitive losers, investing around $278 million in companies associated with FTX founder and former CEO Sam Bankman-Fried. Bankman-Fried was arrested in the Bahamas earlier this week and faces a welter of scathing lawsuits from U.S. authorities.

Paradigm co-founder Matt Huang last month expressed “deep regret” over the Bankman-Fried investments and said he had written their value down to zero. He stressed, however, that Paradigm never invested in FTX’s collapsed token, FTT. The firm had only invested in equity, he said, which took up a relatively small portion of its balance sheet.

The state of crypto venture capital

Crypto VC is in a difficult place. Though data from Pitchbook suggests that there is still more venture capital in crypto than in fintech and biotech, investors are feeling the pressure.

Last month, former industry champion Multicoin Capital had its assets frozen due to its investments in FTX. Across the board, the once-exuberant flood of VC funding has thinned to a trickle, despite efforts to keep the industry afloat.

The wider crypto industry has seen an increasing number of layoffs over the past month, including deep cuts at Coinbase (18%), Opensea (20%), and Kraken (30%).

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