Cryptocurrency trading platform Coinbase is firing 20% of its workforce, the latest indicator of turmoil for the tech and crypto industries.
The company cited adverse economic conditions and disruptions within cryptocurrency markets for its decision to cut nearly 950 jobs, the second round of layoffs in less than a year. Coinbase slashed 18% of its workforce, or 1,100 jobs, in June, citing a need to manage costs amid rapid expansion.
Coinbase is a remote-first company that was founded in 2012 and has no headquarters. It skipped the traditional underwriter process during its push to go public in April 2021, deciding to list its stock directly.
Coinbase’s fate is not entirely its fault, according to co-founder and CEO Brian Armstrong. In a statement, he alluded to FTX founder Sam Bankman-Fried’s trial for charges that he cheated investors and looted customer deposits on his cryptocurrency trading platform.
Armstrong noted the risk of “further contagion” in the cryptocurrency sector and mentioned the presence of “unscrupulous actors in the industry,” referring to FTX and its founder. He also said that Coinbase grew “too focused on growing headcount as a metric for success.”
Coinbase said the move would result in new expenses of between $149 million and $163 million for the first quarter, most consisting of employee severance packages. According to a new regulatory filing, the layoffs and other restructuring measures will bring Coinbase’s operating expenses down by 25% for the quarter ending in March.
“As we examined our 2023 scenarios, it became clear that we would need to reduce expenses to increase our chances of doing well in every scenario,” Armstrong said. “While it is always painful to part ways with our fellow colleagues, there was no way to reduce our expenses significantly enough, without considering changes to headcount.”
Bitcoin has famously plunged almost 60% over the past year, and coupled with the late 2022 collapse of cryptocurrency exchange FTX, it has been a volatile stretch for the industry. Customers tried to withdraw billions of dollars from FTX after its financial stability came into question, leading the company to declare bankruptcy after what amounted to a bank run.
Coinbase is the latest tech company to resort to staff cuts during this tumultuous time in the industry. Both Amazon and Meta announced cuts of over 10,000 jobs, while Twitter broadcasted the release of nearly half its workforce following its acquisition by Elon Musk.
