Cryptocurrency giant Coinbase is laying off 18 percent of its employees as the crypto market continues to experience a decline and macroeconomic challenges continue to set in affecting businesses in (and even out of) the space.
Coinbase CEO @brian_armstrong announced today the difficult decision to reduce the size of the Coinbase team by 18%. More details and rationale in Brian’s email to employees, which has been made public for all to see ➡️ https://t.co/SpdZU3KdpS
— Coinbase (@coinbase) June 14, 2022
As seen in an email sent to employees on Tuesday and in a blog post the company published, the company will be cutting about 18 percent of full-time jobs which will translate to about 1,100 people out of a total headcount of about 5,000 employees.
On Monday, the company’s shares closed down 11.4 percent as Bitcoin and the crypto market continue to suffer declines with flagship cryptocurrency Bitcoin trading at its lowest since December 2020. The cryptocurrency market has also fallen below its trillion-dollar milestone and lost $150 billion over the last weekend.
Following the announcement to slash jobs, shares of Coinbase fell about 7 percent in pre-market trading.
Explaining the reason for slashing jobs, CEO Brian Armstrong spoke of a possible recession, a growing need to manage growing costs, and to increase the efficiency of operations. He also spoke about an imminent crypto winter adding that the company grew too quickly during a bull market. “We appear to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter, and could last for an extended period,” Armstrong said, adding that the crypto winters that have occurred in the past have caused a significant decline in trading activity.
“While it’s hard to predict the economy or the markets, we always plan for the worst so we can operate the business through any environment,” he added.
In the blog post shared, Brian Armstrong wrote that “Team, today I am making the difficult decision to reduce the size of our team by about 18%, to ensure we stay healthy during this economic downturn. I want to walk you through why I am making this decision below, but first I want to start by taking accountability for how we got here. I am the CEO, and the buck stops with me.”
Earlier this month, the company announced that it was rescinding job offers and pausing hiring. “The extended hiring pause will include backfills, except for roles that are necessary to meet the high standards we set for security and compliance, or to support other mission-critical work,” the company’s CEO said. At the beginning of the year, the company planned on adding 2,000 new jobs across its product, engineering, and design teams.
“Our employee costs are too high to effectively manage this uncertain market. While we tried our best to get this just right, in this case, it is now clear to me that we over-hired,” Coinbase’s CEO said.
Interestingly, Coinbase isn’t the only company in both the crypto space and the general business space that has either paused hiring or laid-off workers. Recently electric vehicle maker Tesla laid off 10 percent of its employees including its country manager for Singapore.