Crypto exchange Coinbase plans to cut almost a fifth of its workforce, in the latest sign of the chill descending on the digital assets market as token prices tumble.
The US-listed group’s plans to reduce its staffing by 1,100 employees comes as a sharp downturn in the crypto market threatens to deal a heavy blow to its revenues that are reliant on trading volumes.
Bitcoin has lost more than 60 per cent of its value since hitting an all-time high last November of almost $69,000, dipping below $21,000 on Tuesday. Other companies, including Coinbase’s rival exchange Gemini, Crypto.com, and crypto lending platform BlockFi, have also announced in recent weeks plans to lay off large swaths of their workforces. Before Tuesday’s announcement, Coinbase had also rescinded existing job offers, citing rapidly changing market conditions.
Brian Armstrong, Coinbase’s chief executive, said the group made the decision in an attempt to “stay healthy during this economic downturn”. The group derived about four-fifths of its revenue from retail trading in the first quarter — something that has cooled dramatically as crypto prices sag.
In Tuesday’s announcement, Armstrong said: “I am the CEO, and the buck stops with me.” He conceded that Coinbase “grew too quickly” in light of last year’s broader crypto market bull run.
“It’s challenging to grow at just the right pace given the scale of our growth. While we tried our best to get this just right, in this case it is now clear to me that we over-hired”, he said.
Coinbase had already flagged a slowdown in hiring in May. In the same month, the group revealed a first-quarter net loss of $430mn. Coinbase’s shares have plummeted 79 per cent so far this year.
In a separate blog, Armstrong said affected employees would receive a notification by personal email as the company had already decided to cut their access to Coinbase systems.
Coinbase expects to incur about $40mn to $45mn in restructuring expenses related to the lay-offs, the group said in regulatory filing. Employees that have been let go by the exchange will receive a minimum of 14 weeks severance, and certain healthcare benefits.