Cryptocurrency exchange Coinbase is laying off an additional 20% of its staff, or 950 employees, in the company’s latest round of layoffs, and reducing its operating expenses by 25%.
Brian Armstrong, co-founder and chief executive officer of Coinbase, said today that the decision came amid the cryptocurrency market downtrend of 2022 “along with the broader macroeconomy” and “[w]We have also seen the fallout from unscrupulous players in the industry and there could still be further contagion.
This marks the third round of layoffs for the company since last year, starting with 18% of its staff, about 1,100, in June and another 60 employees in November.
Armstrong commented that the decision was difficult, but it became clear the company needed to cut expenses for 2023 to increase its chances of doing well for the year.
“While it’s always painful to part ways with our colleagues, there was no way we could reduce our expenses significantly enough, without considering headcount changes,” Armstrong said.
In a filing with the Securities and Exchange Commission, the exchange said it expects to incur between $149 million and $163 million in restructuring expenses and between $58 million and $68 million in employee severance-related charges.
While 2021 was a booming year for cryptocurrency markets, 2022 saw the start of a broad recession better known as the “cryptocurrency winter,” in which cryptocurrencies saw steep declines. Bitcoin lost about 60% of its value between January 2022 and January 2023, dropping to $17,300 from $47,000.
Coinbase is currently the second-largest cryptocurrency exchange by volume, according to analytics website CoinGecko, with $1.7 billion in 24-hour volume.
The cryptocurrency industry and markets have recently faced a great deal of turmoil with the collapse and bankruptcy of cryptocurrency exchange FTX in November, which was previously the third largest exchange by volume and a competitor to Coinbase.
Coinbase isn’t the only cryptocurrency exchange to face layoffs in the first month of 2023. Huobi Global, the sixth-largest exchange by volume ranked by CoinGecko, announced plans to lay off 20% of its staff last week. Cryptocurrency banking platform Silvergate Capital Corp. laid off 40% of its staff on Jan. 5, and cryptocurrency lender Genesis Global Trading Inc. also cut its staff by 30%, after laying off 20% in August.
Armstrong noted in his commentary that Coinbase grew very rapidly in 2021 and that in the last decade, like most technology companies, it has focused too much on staff growth, and now is the time to focus on operational efficiency. Also, despite the dark times in the industry, he said he is optimistic about the times ahead.
“Despite everything we’ve been through as a company and an industry, I’m still optimistic about our future and the future of cryptocurrencies,” Armstrong said. “Just as we’ve seen with the Internet, top companies not only survive, but thrive during down markets by being strict with cost management and continuing to build innovative products.”
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