The newest round of layoffs announced by Coinbase, a cryptocurrency exchange based in the United States, will affect around 900 workers.
Brian Armstrong, CEO of Coinbase, revealed the plans in a public letter on Tuesday, citing difficult market conditions. The cryptocurrency market experienced a downward trend in 2022, following the general macroeconomic trend. We also witnessed the effects of dishonest actors in the sector, and more contagion may still occur, he wrote.
Armstrong went into detail about Coinbase's prospects for the year 2023 and stated that it has become "obvious" that the company needs to cut costs in order to improve its chances of success "in all scenarios."
Although the choice to reduce employees was painful, the director said, "There was no way to considerably reduce our expenses without considering changes in staff." The letter indicates that all impacted team members will be notified today. The Block claims that the layoff affects 20% of the Coinbase workforce.
Additionally, the organisation informed the US Securities and Exchange Commission of its objectives (SEC). According to a report from CoinDesk, Coinbase stated in that paper that the company anticipates spending between $149 million and $163 million on the restructure, including expenses for employee severance pay.
This is the third time in the past year that the exchange has reduced its employees. The Nasdaq-listed company started laying off employees in June of last year when the crypto market entered a bear cycle. It fired 1,100 employees at the time, or 18% of its staff, and then another 60 people in November.
According to CoinDesk, Armstrong has stated that Coinbase's "expansion too swiftly" during the bull market, going from 1,250 personnel to more than 5,000 in early 2021.
In the midst of a chaotic year for the sector that saw the downfall of numerous well-known companies, including Celsius and FTX, the price of bitcoin fell by more than 60% last year.
Armstrong was optimistic despite the gloomy prognosis. He stated in his letter today that "Coinbase is well capitalised and crypto is not going anywhere." Citing the bankruptcy of its rival, FTX, he also predicted that recent developments would be advantageous for the business, albeit the benefits won't be felt right away.
Coinbase is by no means the first company to choose to reduce staff in the midst of the "crypto winter." More than 20 cryptocurrency-related businesses made layoffs last year. Both Genesis and Silvergate have lately this year announced workforce reductions.
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