Coinbase plans to lay off 1,100 employees or 18% of its workforce, CEO Brian Armstrong said on Tuesday, marking another cryptocurrency exchange that has cut jobs in recent weeks.
“It looks like we’re entering a recession after more than 10 years of economic boom,” Armstrong said in a blog post. “A recession could lead to another cryptocurrency winter and could last for a long time,” he wrote, referring to a period in which cryptocurrency prices fall and remain low for weeks.
“In recent crypto winters, commercial revenue (our largest source of revenue) has declined significantly,” Armstrong said in the blog post. “While it is difficult to predict the economy or markets, we always plan for the worst in order to be able to operate the business in any environment.”
Coinbase is one of the largest exchanges in the crypto world with 98 million users and $ 256 billion in assets on the platform. The company will end the layoffs by the end of June, the company said in a regulatory document. The company expects to spend $ 40 million to $ 45 million on “employee severance pay and other severance pay.”
The layoffs are the latest chapter in Coinbase’s recent struggles. The company last month recorded a loss of $ 430 million in the first quarter as monthly active users decreased by 19%. The company also introduced a freeze on hiring this month, adding that some job offers may even be canceled.
Armstrong said Coinbase, which now has about 5,000 employees, is laying off workers after the company hired too many people, too quickly. Coinbase started last year with about 1,250 employees, the CEO said, but soon realized that “the adoption of cryptographic products was exploding.” At the time, company officials had to decide how many additional employees were needed to endow the madness with cryptography, Armstrong said.
“While we did our best to do it right, in this case I’m clear now that we hired in excess,” Armstrong said.
Coinbase’s layoffs come amid a huge sell-off in the wider cryptocurrency market. Some investors are shunning risky investments in favor of more stable assets amid growing economic concerns and as the economy struggles with the highest inflation in the last 40 years.
TechWatch: Billionaire twins will lay off 10% of the workforce
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The total market value of cryptocurrencies fell below $ 1 trillion on Monday to $ 983 billion, the first time it has fallen below that mark since January 2021, according to CoinMarketCap.
The most popular cryptocurrencies, such as ether, solarium and tether, have lost value in sales, while bitcoin has fallen in price since December 2020, according to Bloomberg News. These declines are also causing layoffs for Coinbase competitors.
Crypto.com plans to lay off 260 employees, or 5% of its workforce, the company’s CEO Kris Marszalek said in a tweet on Friday. Earlier this month, cryptocurrency company Gemini Trust, owned by Winklevoss twins Cameron and Tyler, said it plans to lay off 10 percent of its staff, the first time the company has had to cut jobs, Bloomberg News reported. Bitso, Buenbit and Mercado Bitcoin cryptographic platforms have also laid off workers.
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