Coinbase to cut nearly one-fifth of employees as the cryptocurrency crisis worsens
Coinbase will cut almost a fifth of its workforce after sharp price falls and a decline in cryptocurrency trading volumes shook some of the industry’s largest players.
The Nasdaq-listed exchange said on Monday that it would cut 1,100 employees as it struggled with a decline in trading that has forced it to abandon growth plans.
Bitcoin has lost more than 60 percent of its value since November, when it reached a record high of almost $ 69,000. On Tuesday, Bitcoin fell below $ 21,000. Other coins, including ether, have been hit by even more severe falls.
The Coinbase move follows cuts on rival exchanges such as Gemini and Crypto.com, as well as the cryptocurrency lending platform BlockFi, which have all announced plans to lay off large parts of their workforce in recent weeks.
There is also unrest in the Celsius Network, one of the world’s largest crypto lending services, which this week blocked all customer withdrawals.
Coinbase, a platform that allows retailers to invest in a range of digital assets, derived around four-fifths of retail revenue in the first quarter. But volumes have cooled sharply as cryptocurrencies have fallen. Coinbase’s shares have fallen 79 percent so far this year as investors have soured their prospects.
CEO Brian Armstrong said the cuts were an attempt to “stay healthy during this economic downturn” after an aggressive hiring spree that raised the number of employees to 6,000 from 3,730 at the end of last year.
“I’m the CEO, and the money stops with me,” he said, adding that Coinbase “grew too fast”.
The jobs in Coinbase underline the sudden change in wealth in the crypto market. Just months ago, crypto companies including Coinbase and FTX went on a marketing blitz, buying ad slots in the Super Bowl, while Crypto.com bought the naming rights to the sports arena that is home to the Los Angeles Lakers basketball franchise.
The downturn in the crypto market has mirrored sales in traditional asset markets triggered by rising inflation and a sharp tightening of monetary policy by global central banks.
The Federal Reserve’s policy-making panel concludes a two-day meeting on Wednesday, where it is expected to raise interest rates by as much as 0.75 percentage points, which will be the steepest increase in almost 30 years.
Coinbase first indicated that it could cut jobs last month when it fell to an unexpected net loss in the first quarter of $ 430 million. It also angered some Coinbase employees recently by withdrawing some existing job offers.
Armstrong said Tuesday that the company had already cut access to Coinbase systems for affected employees. He defended it as the “only practical choice, to ensure that not a single person made a hasty decision that harmed the business or himself”.
Coinbase expects to incur around $ 40mn- $ 45mn in restructuring costs related to the layoffs, the group said in a regulatory filing.
Last week, an anonymous employee petition called for the removal of three leading Coinbase executives for failures at several product launches, monitoring of a toxic work culture and aggressive hiring for thousands of roles, “despite being an unsustainable plan”.
Armstrong called the petition “really stupid on several levels,” and invited unhappy employees to “stop and find a company to work for that you believe in.”
