Coinbase to cut 20% of the workforce in dual major round of job stakes
January 12, 2023: -Coinbase is cutting regarding a fifth of its workforce as it looks to preserve cash in the crypto market downturn.
They exchange ideas to cut 950 jobs, according to a blog post published on Tuesday. Coinbase, which had almost 4,700 employees as of the end of September, already cutting 18% of its workforce in June, which cited a need to manage costs and increasing “too quickly” during the bull market.
“With perfect hindsight, which looks back, we should have done more,” CEO Brian Armstrong stated in a phone interview. “The best you can do is react quickly once notification evolves available, and that’s what we’re doing in this case,” he further said.
According to a recent regulatory filing, the layoffs and other restructuring measures will get Coinbase’s operating expenses down by 25% for the quarter, which ends in March. Coinbase said the move would result in new costs of between $149 million and $163 million for the first quarter. The crypto company also stated that it expects adjusted EBITDA losses for the entire year to be within a prior $500 million “guardrail” set in the previous year.
After looking at different stress tests for Coinbase’s annual revenue, Armstrong said, “it became much clear that we would need to decrease expenses to increase our chances of doing well in all the scenarios,” and there was “no way” to do so without decreasing headcount. The company will also shut down several assignments with a “lower probability of success.”
Cryptocurrency deals have been rocked in recent months following the collapse of one of the industry’s most prominent players, FTX. Armstrong pointed to that fallout, which increases pressure on the sector thanks to “unscrupulous actors in the industry, ” referring to FTX and its founder, Sam Bankman-Fried.
“The FTX collapse and the outcome contagion has made a black eye for the industry,” he said, adding there are likely more “shoes to drop.”
“We may not have experienced the last of it. There will be increased scrutiny on various firms in the space to ensure that they’re following the rules,” Armstrong said. “A long term, that’s a good thing. But very little time; there’s still a lot of market fear.”
Cryptocurrencies suffer alongside technology stocks as investors flee riskier assets during a broader economic downturn. Bitcoin decreased 58% in the previous year, while Coinbase shares are off by over 83%.
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