Coinbase lays off 1,100 employees as CEO foresees upcoming impact of crypto crash
The crypto exchange company Coinbase announced on Tuesday that it will lay off 18% of its labor force. This equals approximately 1,100 people. The crypto brokerage firm is looking to cut costs ahead of foreboding crypto winter.
While Coinbase was final on its decision, they aren’t the first firm to do so. Other business entities have gone on the path of reducing their labor force. Which is the effect of the continuous downfall of cryptocurrencies.
Coinbase CEO and co-founder Brian Armstrong concluded on the immediate employees’ layoff. He is looking to an impending plunge in the US economy and an incoming “crypto winter.”
JUST IN: #Coinbase will lay off around 18% of its workforce, about 1000 employees.
— Watcher.Guru (@WatcherGuru) June 14, 2022
A “crypto winter” is a state when prices “remain low for an extended period. Coinbase saw the cost-cutting as a solution and practical preparation ahead of the upcoming crypto crash.
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Armstrong said, “In past crypto winter, trading revenue (our largest revenue source) has declined significantly. 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.”
On a positive note, Coinbase already had an established ground. If the crypto is heading into a recession, all Coinbase has to do was adjust and adapt some options. Coinbase is one of the fastest-growing companies based on cryptocurrency.
Coinbase debuted in the public last year and was the first major cryptocurrency to grow that fast.
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
CEO Armstrong wrote in a blog post. He said, “We grew too quickly, too high to effectively manage this uncertain market.”
The crypto firm confirmed that the US employees included in the layoffs will be terminated by Tuesday. Coinbase “will follow applicable local guidelines even for non-US workers. Coinbase is looking to still have 5,000 employees after the layoff. These employees will be fully compensated by the end of the month.
The company delivered the termination news directly to some employees. While some have been cut off from the Coinbase systems. Due to this, announcements went out to the employees via their e-mail addresses.
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The laid-off employees will receive four months of health insurance, 14 weeks of severance, and job-search resources. Coinbase said they are looking into spending about $40 – $45 million on termination expenses.
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Armstrong also said, “While we tried our best to get this just right, in this case, it is now clear to me that we over-hired.”
One thing is for sure, this year has been a rough start for the crypto market. Bitcoin has dropped to half of its market value. In November of 2021, it set a record of $69,000. Now its trade value is just $23,000.
In addition, Coinbase had already warned about the crypto recession ahead of their employees’ layoffs. They said that the sinking crypto prices and volatility that started last year “greatly impacted” the first-quarter financials. It even boosts the trading value down to $309 billion. This is the first quarterly loss of the firm since it launched last April.
Moreover, the total value of the world’s cryptocurrencies has dropped to 70%. It started at an all-time high of $3 trillion and drastically dropped to $929 billion. While this is also in relation to how NASDAQ has plunged significantly to about 32% this year.
