By Nathalie Voit
Cryptocurrency exchange platform Coinbase will cut nearly one-fifth of its labor force to remain operationally salient amid recent market events.
In a blog post published on its website, CEO and Cofounder of Coinbase Brian Armstrong cited the possibility of a recession and an upcoming “crypto winter” as the reason for the layoffs.
“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 wrote. “In past crypto winters, 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.”
The CEO also admitted the company grew too quickly during last year’s bull crypto market, noting that its workforce expanded 200% year-over-year since the start of 2021. The company went public last April.
“Our employee costs are too high to effectively manage this uncertain market,” Armstrong said. “While we tried our best to get this just right, in this case, it is now clear to me that we over-hired,” he added.
Employees who were laid off were told about the news over personal email. According to the note, access to Coinbase systems was terminated for those affected due to security reasons.
“I realize that removal of access will feel sudden and unexpected, and this is not the experience I wanted for you. Given the number of employees who have access to sensitive customer information, it was, unfortunately, the only practical choice to ensure not even a single person made a rash decision that harmed the business or themselves,” Armstrong wrote.
The cuts are expected to affect approximately 1,100 people. Coinbase currently has around 5,000 full-time staff.
