Cryptocurrency exchange Coinbase is the latest tech company to announce mass layoffs. In an email to staff on Tuesday, CEO Brain Armstrong said the company would be letting 950 employees go as it attempts to “weather downturns in the crypto market.” The email was made public on the Coinbase blog, and the company also submitted an 8-K filing with the news.
In a not-so-subtle reference to the collapse of major cryptocurrency player FTX, who’s former CEO Sam Bankman-Fried has subsequently been charged with money laundering and fraud, Armstrong cited “the fallout from unscrupulous actors in the industry” as one of the reasons fueling Coinbase’s cost-cutting efforts. Armstrong says the layoffs are part of a plan to reduce Coinbase’s operating expenses by 25 percent on a quarter-over-quarter basis.
“The FTX collapse and the resulting contagion has created a black eye for the industry”
“While it is always painful to part ways with our fellow colleagues, there was no way to reduce our expenses significantly enough, without considering changes to headcount,” Armstrong wrote in his memo. Employees in the US will receive a minimum of 14 weeks base pay plus two additional weeks per year spent at the company. Affected employees will receive an email today.
This is Coinbase’s second major round of job cuts after laying off 18 percent of its staff (1,100 employees) last June, CNBC reported at the time. It cut a further 60 jobs in November.
“The FTX collapse and the resulting contagion has created a black eye for the industry,” Armstrong told CNBC, and suggested that more pain may be yet to come. “We may not have seen the last of it — there will be increased scrutiny on various companies in the space to make sure that they’re following the rules… Long term that’s a good thing. But short term, there’s still a lot of market fear.”
Coinbase’s layoffs come amidst a broader downturn in the crypto market. The value of Bitcoin has plummeted in recent months, and is down around 58 percent over the past year according to CNBC. Coinbase’s shares have trended in a similar direction since going public in April 2021. Its stock is trading at under $40, down from a high of over $340 in 2021.
Outside of the crypto industry, multiple major tech companies have been reducing headcounts in an attempt to weather the current economic downturn. Amazon announced layoffs affecting 18,000 employees last week, Meta laid off 11,000 employees in November, and Twitter’s headcount has been cut by more than half following Tesla CEO Elon Musk’s chaotic acquisition of the social media network.