- Coinbase Global, a leading cryptocurrency exchange, will cut 20% of its workforce or 950 employees.
- The move is part of a restructuring plan to address the crisis of confidence and weak trading volume in the crypto industry
- The crypto sector has been hit hard in recent months, with plunging deposits, layoffs, and legal issues.
Coinbase Global Inc, one of the largest cryptocurrency exchanges, has announced that it will be cutting 20% of its workforce, approximately 950 employees, as part of a restructuring plan to address the ongoing challenges facing the crypto industry. This marks the third round of layoffs for Coinbase since last year, when rising interest rates and concerns of an economic downturn led to the loss of over a trillion dollars from the crypto sector.
However, the larger blow came after crypto exchange FTX filed for bankruptcy protection in November, which further impacted the entire industry. In a blog post, Coinbase CEO Brian Armstrong acknowledged that the crypto industry is currently going through a crisis of confidence, and that trading volume remains very weak. He stated, "We will be shutting down several projects where we have a lower probability of success." The company expects to incur expenses of between $149 and $163 million as a result of the restructuring.
Oppenheimer analyst Owen Lau commented on the situation saying, "This job cut is a reflection of the current challenging environment." Mizuho analyst Ryan Coyne also weighed in, stating that while the layoffs will help with near-term operating leverage, it will not fix the underlying issue of rapidly deteriorating volumes. Coyne went on to say, "It is going to require much more significant cost cutting to accommodate the current volume run rate."
The crypto sector’s woes have continued into this year, marked by plunging deposits, multiple layoffs, and legal hurdles. Coinbase made additional cuts in November, laying off more than 60 employees from its recruiting and institutional onboarding teams, after cutting 1,100 jobs, or 18% of its workforce, in June. The company’s shares lost about 86% of their value last year.