Cryptocurrency exchange Coinbase is cutting its workforce by 18%, according to an 8-K filed by the company on Tuesday, as the crypto market continues to get hammered on expectations of more aggressive Federal Reserve interest rate hikes.
The reduction will shrink the company’s workforce by 1,100 employees to 5,000 in total by June 30, according to the filing.
The announcement adds to a litany of bad news for the crypto industry, with the total value of crypto assets dropping by 25% over the past month from $1.24 trillion to $929 billion as of Tuesday morning, according to Coinmarketcap.
“We appear to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter, and could last for an extended period. In past crypto winters, trading revenue (our largest revenue source) has declined significantly,” Coinbase Founder and CEO Brian Armstrong said in a blog post that announced the layoffs.
“We grew too quickly,” Armstrong added.
A representation of the cryptocurrency is seen in front of Coinbase logo in this illustration taken, March 4, 2022. REUTERS/Dado Ruvic/Illustration
Staffing reductions are spreading quickly across the crypto industry.
On Monday, crypto lender Blockfi and the exchange Crypto.com both announced they are cutting their workforces in light of the down market and a rough outlook for the rest of 2022. BlockFi plans to lay off 20% of its workers and Crypto.com said it’s reducing its staff by 5%.
Last month, Coinbase said it would slow hiring and rescind some job offers, a far cry from the company’s original goal at the beginning of this year to triple its headcount.
The layoffs announced on Tuesday will “incur approximately $40 million to $45 million” in restructuring expenses, according to the filing, but the company did not change the outlook it provided in May when reporting its most recent quarterly earnings.
“Coinbase has survived through four major crypto winters, and we’ve created long term success by carefully managing our spending through every down period,” Armstrong wrote. “Down markets are challenging to navigate and require a different mindset.”
The job loss package includes at least 14 weeks of severance pay, four additional months of health insurance through Cobra, as well as access to the company’s Talent Hub.
“Coinbase employees are among the most talented in the world, and I am certain that the skills you all possess will continue to be sought after by companies around the world,” wrote Armstrong. “I realize it may take longer in this environment to find new employment, and so my hope is that this financial and non-financial assistance helps make this unexpected transition for you as seamless as possible.”
The company would not offer further comments outside of Armstrong’s letter.