Coinbase fires over 1,100 workers as crypto crash deepens

The CEO of crypto exchange, Coinbase, Brian Armstrong announced yesterday that the company will cut its workforce by 18%. This is coming at the back of the downturn in fortune of the crypto market.

The largest United States crypto exchange is taking drastic measures to ensure its survival. Brian Armstrong explained that the company’s employee costs were too high to manage in such an uncertain market. The 18% cut represents over 1,100 employees.

In a note first sent out to employees and later published on the Coinbase blog, Armstrong noted that the company expanded too quickly during the 2020-2021 bull market and had “overhired”. Notably, Coinbase’s workforce grew from 1,250 employees at the beginning of 2021 to around 5,000. 

Armstrong cited the current crypto market downturn, fears of a broader, extended recession, and the company’s rapid growth in 2021 as the reasons for the decision.

“As we operate in this highly uncertain period in the world, we want to ensure we can successfully navigate a prolonged downturn,” 

The layoffs are expected to help the business endure the fast-approaching global recession, which “could lead to another crypto winter, and could last for an extended period.”

Those affected by the layoffs will receive a minimum of 14 weeks of severance pay, an additional two weeks for every year of employment beyond one year and four months of health insurance and access to the company’s Talent Hub, according to the note.

He further highlighted the need for the company to increase efficiency by fully integrating existing employees and making several targeted resourcing changes.

We will recall that on June 3, InvestorPlace published a report detailing Coinbase rescinding its job offers in order to cut costs, citing bearish market conditions.

Who else apart from Coinbase?

At least three other exchanges have laid off at least a portion of their workforces in June. 

At the beginning of June, the Winklevoss-led exchange Gemini cut 10% of its staff, as a result of “turbulent market conditions that are likely to persist for some time.”

Earlier this week, crypto lending platform, BlockFi also revealed it had let go a whopping 20% of its workforce, similarly blaming a “dramatic pull back in equity and crypto markets.”

Also, last Saturday, Crypto.com announced the decision to lay off 260 people, 5% of its corporate workforce.

The company’s CEO, Kris Marszalek in a Twitter thread said that the company’s approach is to “focus on executing against our roadmap and optimizing for profitability as we do so. That means making difficult and necessary decisions to ensure continued and sustainable growth for the long term by making targeted reductions of approximately 260 or 5% of our corporate workforce.”

Binance still standing strong

Despite the prevalence of lay-offs due to the crypto winter, the world’s largest crypto exchange, Binance appears to be optimistic about its future. The platform has announced its commitment to continued hiring efforts. 

Binance founder and CEO Changpeng Zhao in a video at the Consensus 2022 festival in Texas last weekend shared his thoughts on the crypto market situation and how Binance is responding to these events.

“We have a very healthy war chest; we, in fact, are expanding hiring right now. If we are in a crypto winter, we will leverage that. We will use that to the max.”

Binance co-founder, Yi He also told Fortune that they have many roles still open, and view the bear market as an opportunity for expansion:

“We currently have more than 2,000 roles open from engineers, product, marketing to business development. The crypto space is still in its early stages, and bull markets tend to care more about price while bear markets have more value-conscious teams that continue to build the industry. We see this as a great time to bring on top talent.”