Coinbase plans to lay off 1,100 employees or 18% of its workforce, CEO Brian Armstrong said Tuesday, marking yet another cryptocurrency exchange that has slashed jobs in recent weeks.
“We appear to be entering a recession after a 10-plus year economic boom,” Armstrong said in a company blog post. “A recession could lead to another crypto winter, and could last for an extended period,” he wrote, referring to a period when cryptocurrency prices fall and stay low for weeks on end.
“In past crypto winters, trading revenue (our largest revenue source) has declined significantly,” Armstrong said in the blog post. “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.”
Coinbase is one of the crypto world’s largest exchanges with 98 million users and $256 billion in assets on the platform. The company will finish the layoffs by the end of June, the company said in a regulatory filing. The company expects to spend $40 million to $45 million in “employee severance and other termination benefits.”
Layoffs are the latest chapter in Coinbase’s recent struggles. The company last month reported a $430 million first-quarter loss as active monthly users declined 19%. The company also instituted a hiring freeze this month, adding that some job offers may even be rescinded.
Armstrong said Coinbase, which now has about 5,000 employees, is laying off workers after the company brought on too many people, too quickly. Coinbase started last year with about 1,250 workers, the CEO said, but soon after noticed the “adoption of crypto products was exploding.” At that point, company officials had to decide how many additional employees were needed to staff the crypto craze, 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,” Armstrong said.
Coinbase’s layoffs come amid a huge sell-off in the broader cryptocurrency market. Some investors are shying away from risky investments in favor of more stable assets amid deepening economic worries and as the economy grapples with the highest inflation in 40 years.
The total market value of cryptocurrencies plunged below $1 trillion on Monday to $983 billion, the first time it has dropped below that mark since January 2021, according to CoinMarketCap.
The most popular cryptocurrencies — including ether, solana and tether — have all lost value in the sell-off, while bitcoin has fallen to its lowest price since December 2020, according to Bloomberg News. Those declines are causing layoffs at Coinbase’s competitors as well.
Crypto.com plans to lay off 260 employees, or 5% of its workforce, company CEO Kris Marszalek said in a tweet Friday. Earlier this month, cryptocurrency company Gemini Trust, owned by Winklevoss twins, Cameron and Tyler, said it plans to lay off 10% of its staff, marking the first time the company has ever had to cut jobs, Bloomberg News reported. Crypto platforms Bitso, Buenbit and Mercado Bitcoin have also laid off workers.
