Coinbase CEO Brian Armstrong announced on Tuesday that he had made the tough decision to cut the size of the Coinbase staff by around 18%. The primary reason is said to be a looming economic recession. According to a regulatory filing, the company will lay off around 1,100 people, which is 18% of its workforce, and plans to have 5,000 total employees by the end of its current financial quarter on June 30, 2022. The company expressed that it would slow down hiring and reevaluate its headcount to assure that it could continue operating as intended.
1/ Today I shared that I’ve made the difficult decision to reduce the size of our team at Coinbase by about 18%. The broader market downturn means that we need to be more mindful of costs as we head into a potential recession.— Brian Armstrong – barmstrong.eth (@brian_armstrong) June 14, 2022
Armstrong stated that the company has been overgrowing, with Coinbase employing 1,250 people as of early 2021. According to the CEO, the team has grown fourfold in the last 18 months, and their employee expenditures are too high to handle this volatile industry efficiently. Moreover, according to him, Coinbase appears to be entering a recession after a ten-year economic boom and a recession might trigger another crypto winter that lasts for a long time. He also mentioned that trading revenue had decreased dramatically during previous crypto winters. Furthermore, he emphasized the fact that Coinbase has endured four big crypto winters since its inception in 2012.
After the layoff decision, Coinbase joins a growing list of companies that have had to cut workers due to the current bear market. It includes the Winklevoss brothers-founded Gemini, crypto-friendly trading site Robinhood, and the BlockFi trading platform, which announced a 20% layoff on Monday. Furthermore, on Saturday, Crypto.com CEO Kris Marszalek announced on Twitter that the Singapore-based exchange platform would cut off 260 employees, or 5% of its staff.
Even though some crypto companies are cutting their employees, others are still looking for new talent. Binance, one of the world’s largest cryptocurrency exchanges, is still hiring, with over 2,000 engineering, product, marketing, and business development positions available.
Coinbase will provide the necessary assistance to laid-off employees.
According to the press release, all laid-off employees will get help finding new jobs. They will get a minimum of 14 weeks of payout and an extra two weeks for each year of work beyond the first year. In addition, they will also receive four months of health insurance in the United States and four months of mental health support worldwide.
Bitcoin holders may lose money in this process
After the leading cryptocurrency dropped to $20,834 late Monday, the least since December 2020, over half of the bitcoin holders who use Coinbase as an exchange are likely to lose money. Bitcoin BTCUSD, -2.92 percent, is currently trading down by 6% in the last 24 hours and over 70% below its all-time high since November. Based on a poll of 145 clients on the exchange, Mizuho estimated the average cost basis for bitcoin holders on Coinbase COIN, -0.83%, to be $21,000. They anticipate that if the cryptocurrency falls below that level, approximately half of the holders polled will lose money.
Overall, Coinbase was the very first crypto exchange to go public and commenced its Nasdaq listing in April 2021, making it one of the most promising initial public offerings (IPOs) of the year. However, according to analysts, due to the recent decision, Coinbase might hamper the company’s efforts to create new revenue streams as it faces increased competition.