Coinbase to lay off 18 percent of staff amid ‘crypto winter’
( Hill )
Coinbase will lay off 18 percent of its workforce amid plummeting cryptocurrency prices and a global economic slowdown, the company announced Tuesday.
CEO Brian Armstrong told employees in a memo that the crypto exchange needs to keep costs down to survive a bear market, which requires a “different mindset” to navigate.
“We appear to be entering a recession after a 10+ year economic boom,” he wrote. “A recession could lead to another crypto winter, and could last for an extended period. In past crypto winters, trading revenue (our largest revenue source) has declined significantly.”
The announcement comes after cryptocurrencies took a beating to start the week. Bitcoin has plunged nearly 20 percent, a nosedive that was spurred by crypto lender Celsius Network’s decision to prevent users from pulling funds due to “extreme market conditions.”
The total crypto market cap has lost $2 trillion in value in less than a year and recently dropped below $1 trillion for the first time since early 2021.
Rising interest rates and red-hot inflation appear to be driving investors away from risky assets like crypto, and investor confidence in digital currencies waned after several stablecoins lost their 1-to-1 peg with the U.S. dollar last month.
Armstrong told employees in the memo that Coinbase grew too quickly, noting that its workforce expanded by roughly 200 percent since the beginning of 2021.
“While we tried our best to get this just right, in this case it is now clear to me that we over-hired,” he wrote.
Last month, Coinbase said that it would freeze hiring and pull job offers to individuals who had already accepted a job at the exchange.
Experts believe that more trouble is ahead for crypto firms if prices continue to fall. On Saturday, Crypto.com announced that it would lay off 5 percent of its workforce due to a “market downturn.” Earlier this month, crypto exchange Gemini announced plans to lay off 10 percent of its workforce due to the “crypto winter.”