It has been reported that Coinbase, a major cryptocurrency exchange, will be cutting a significant portion of its workforce in an effort to preserve cash during the current market downturn. In a blog post published on Tuesday, the company announced plans to reduce its workforce by 950 individuals, representing approximately 20% of its total employee count, which stood at approximately 4,700 as of the end of September. This action follows a previous reduction of 18% of its workforce in June, which was implemented as a cost-saving measure and in response to rapid expansion during the previous bull market.
In an interview with CNBC, Coinbase’s CEO, Brian Armstrong, acknowledged that the company had not sufficiently prepared for the current market conditions, stating “With perfect hindsight, looking back, we should have done more.” He further stated that the company’s decision to implement these layoffs and restructuring measures, which are expected to result in new expenses of between $149 million and $163 million for the first quarter, is a necessary step to increase the company’s chances of success in an uncertain market environment.
Coinbase has also announced that it will be discontinuing several projects with a lower likelihood of success in order to further decrease operating expenses. Additionally, the company has stated that it expects to incur adjusted EBITDA losses for the full year within a previously established “guardrail” of $500 million.
The cryptocurrency markets have been significantly affected in recent months, with the collapse of one of the industry’s leading players, FTX, causing ripple effects throughout the sector. Armstrong highlighted the impact of these events and the increasing pressure on the industry due to the actions of “unscrupulous actors”, referring specifically to FTX and its founder, Sam Bankman-Fried. He further stated that the industry can expect increased scrutiny in the coming months to ensure compliance with regulatory requirements, which may result in further market volatility.
In light of these developments, Coinbase joins a growing number of technology companies that have been forced to reduce their workforce following a period of expansion during the COVID-19 pandemic. This trend is not limited to the cryptocurrency industry, with companies such as Amazon, Salesforce, and Meta also announcing significant job cuts in recent months.
The CEO of Coinbase also mentioned that the focus for the industry will now shift to operational efficiency, and it’s a good thing for the ecosystem and industry to focus on that.
Overall, the announcement of these layoffs marks the end of a growth era for Coinbase and signals a transition towards a more frugal and sustainable operational model, as the company seeks to navigate the current challenging market conditions.