The leading crypto exchange in the US is cutting about a fifth of its workforce, while seeking to maintain liquidity during the downturn in the crypto market. The exchange plans to cut 950 jobs, according to a publication on CNBC. Coinbase, which had about 5,000 employees as of the end of September last year , already cut 18% of its workforce in June, citing a need to manage costs and “too fast” growth during the bull market.
● The Fed warns of the risk of crypto to the banking system
● Towards bankruptcy? Crypto company Genesis lays off 30% of employees
● Formerly ardent crypto supporters are leaving the field after the FTX collapse
“In hindsight, we should have done more,” CEO Brian Armstrong told CNBC. “The best thing to do is to respond quickly as information becomes available, and that’s what we’re doing now.”
Coinbase said that the move will result in a reduction in expenses at a rate of between $149 million and $163 million in the first quarter. The layoffs, along with other restructuring measures, will reduce Coinbase’s operating expenses by 25% in the quarter ending in March. After reviewing Coinbase’s annual revenue, Armstrong said, “It became clear that we would have to reduce expenses to increase our chances of success in any scenario, and there is no way to do that without reducing the number of employees. The company will also close a number of projects with a “lower probability of success.”
In doing so, Coinbase joins a number of other tech companies that are making layoffs after the hiring binge that occurred during the pandemic. Last week, Amazon announced its intention to cut some 18,000 jobs, more than it initially estimated last year, while Salesforce cut its workforce by more than 7,000, or 10% of its total workforce. Elon Musk also cut about half of Twitter’s workforce after taking the helm as CEO last year, and Meta cut more than 11,000 jobs, 13% of its workforce.
“Every company in Silicon Valley felt like the focus was just on growth, growth, growth, and people were almost using their headcount as a measure of their progress,” Armstrong said. “The focus now is on operational efficiency – a healthy step for the ecosystem and the industry.”
not disappearing
The turbulent time the crypto sector is going through, dubbed the “crypto winter”, has led to a chain reaction of bankruptcies in the industry. Despite the effect and a noticeable decrease in trading volume, Armstrong was firm in his claim that the industry is not going away. He said the collapse of FTX will ultimately benefit Coinbase, as its biggest competitor has now been wiped out. The CEO compared the current environment to the dot-com boom and bust, and expressed hopes that the industry will gain regulatory clarity that will benefit it.