- Coinbase intends to cut 950 jobs
- Coinbase shares are down 83% in a year
The US cryptocurrency exchange is slashing about a fifth of its workforce as it tries to preserve cash in this ongoing crypto winter, CNBC wrote. Coinbase intends to cut 950 jobs, according to a blog post published Tuesday morning.
Exchange already cut 18% of staff
The exchange had around 4,700 employees at the end of September. It cut 18% of its staff last June, citing excessive growth during the bull market and a need to manage costs. CEO Brian Armstrong said in an interview with CNBC:
With perfect hindsight, looking back, we should have done more. The best you can do is react quickly once information becomes available, and that’s what we’re doing in this case.
Expenses of up to $163M in first quarter
The decision is expected to result in new expenses of $149 – $163 million for the first quarter. However, restructuring measures like the layoffs will bring Coinbase’s operating expenses down by a quarter, a new regulatory filing showed.
According to Armstrong, reducing expenses has become imperative. Laying off staff was the only way. Coinbase is also terminating a number of projects with a “lower probability of success.”
The aftermath of FTX’s fallout
Cryptocurrency markets underwent excessive volatility after the collapse of FTX, one of the industry’s biggest players. Armstrong brought up the rising pressure on the sector, saying:
The FTX collapse and the ensuing contagion have created a black eye for the crypto sector. This might not be the last of it. Scrutiny on various companies in the space will increase to make sure that they’re following the rules. That’s positive in the long term, but short term, there’s still a lot of market fear.
The flight of investors
Cryptocurrencies and tech stocks have suffered as investors run from riskier assets against the backdrop of a looming recession and broader economic downturn. In the last year, Bitcoin lost 58% of its value. Coinbase shares are down 83%. Crypto exchanges Kraken, Gemini, and Genesis have also reduced their headcounts.
A shift in priorities
According to Armstrong, there was an excessive focus on growth in Silicon Valley. Companies were using their workforce number as a symbol of progress. The focus has now shifted to operational efficiency.
Armstrong has not lost hope for the industry despite the domino effect of bankruptcies and a drastic decline in trading volume. He believes FTX’s collapse will ultimately benefit his own exchange because they were Coinbase’s biggest competitor.
