As crypto prices collapse, Coinbase has announced it is laying off 18% of its employees as the company prepares for what the CEO is calling a crypto-winter.
According to an email it sent to employees Tuesday, Coinbase will let go about 1,100 employees out of its total workforce of about 5,000 employees.
CEO Brian Armstrong said the company had grown too quickly during the boom of crypto, and now the company needed to scale back its burn rate and increase efficiency as a possible recession approaches.
Armstrong said, “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… While it’s hard to predict the economy or the markets, we always plan for the worst so we can operate the business through any environment.”
Earlier this year, Coinbase had announced plans to hire 2,000 more workers in product engineering and design. Then it had announced it was going to pause hiring. Two weeks after that it announced it was going to continue the pause for the, “foreseeable future.”
Armstrong continued, “Our employee costs are too high to effectively manage this uncertain market. While we tried our best to get this just right, in this case it is now clear to me that we over-hired.”
Coinbase shares have undergone a steep rout in the market. It went public last April during a boom in the crypto sector, as investors were rushing into high-tech growth stocks. But is has declined massively since then, losing 85% since it first debuted, and 79% just this year alone. It reported a decline in users last quarter and had a 27% decline in revenue year over year, since it makes its revenue from transaction fees.
President and chief operating officer Emilie Choi said it was a “very difficult decision for Coinbase” but it “felt like the most prudent thing to do right now.”
Employees to be laid off were notified directly by Human Resources, however the memo had to be sent to a private email, as all access to company systems was already cut for affected employees. Armstrong said because employees had access to private customer information, it was the “only practical choice” to “ensure not even a single person made a rash decision that harmed the business or themselves.”
Coinbase is only one of many tech and crypto companies which has stopped all hiring, and begun letting employees go. BlockFi announced a 20% staffing cut on Monday. Open-source tracker Layoffs.fyi estimates the tech sector has cut 5,500 jobs, just in June alone.
