Getty Images | Patrick T. Fallon
Cryptocurrency exchange Coinbase is laying off 18 percent of its staff, the company announced today. The layoffs will cut 1,100 employees at the largest crypto exchange in the US, leaving about 5,000 employees, Coinbase said in a filing from the Securities and Exchange Commission.
“In the next hour, every employee will receive an email from HR to inquire whether or not you are affected by this layoff,” CEO Brian Armstrong wrote in a memo to staff posted to the company blog. Dismissed employees “will receive this notification in your personal email as we have made the decision to end access to Coinbase systems for affected employees.”
The immediate shutdown of Coinbase systems was necessary due to “the number of employees who have access to sensitive customer information,” Armstrong wrote. This was “the only practical choice to ensure that not even a single person made a hasty decision that harmed the company or themselves,” he wrote.
Mourning in the crypto market
The layoffs at Coinbase came amid a price drop in the cryptocurrency market that impacted bitcoin, ether and other cryptocurrencies. Several other crypto firms have announced major staff cuts in recent days. Coinbase’s stock price has fallen more than 33 percent since May 31.
According to Armstrong’s memo, Coinbase had more than quadrupled its workforce in the past year and a half. “We grew too fast,” Armstrong wrote. “We had 1,250 employees in early 2021. We were in the early innings of the bull run and crypto adoption exploded.”
But now the CEO wrote: “It looks like we are entering a recession after an economic boom of more than 10 years,” which “could lead to another crypto winter, and one that could last for a longer period of time. source of income) has decreased significantly.”
Coinbase’s “staff costs are too high to manage this uncertain market effectively” and over the past few months adding new employees has made us less efficient, not more,” Armstrong wrote. “We’ve seen ourselves slow down significantly due to headwinds on coordination and difficulties in fully integrating new team members. We believe the targeted resource changes we are making today will enable our organization to become more efficient.”
Employees fired will receive 14 weeks of severance pay, plus an additional two weeks for each year of service longer than a year, Armstrong wrote. Coinbase “estimates it will incur about $40 million to $45 million in total restructuring costs,” primarily through layoffs, the SEC filing said.
In the first quarter of 2022, Coinbase reported revenue of $1.2 billion and a net loss of $430 million after posting gains and higher revenue in each quarter of 2021.
CEO urged disgruntled employees to quit
Last week, a petition by Coinbase employees called for a “voice of no confidence” and the removal of several high-ranking executives. Armstrong responded on Twittercalled the petition “really stupid on multiple levels,” in part because it targeted executives, but not Armstrong himself.
“First of all, if you want to do a vote of no confidence, do it to me and not blame the executives. Who do you think runs this company? I was a little offended that I wasn’t included :),” Armstrong wrote . He added that “if you don’t trust the directors or CEO of a company, why are you working for that company? Quit it and find a company to update you believe in!”
Armstrong also clashed with employees in 2020 when he told them not to “internally debate causes or political candidates that have nothing to do with work”. Sixty Coinbase employees then accepted a buyout offer that was “made available to any employee who did not feel they could be in this direction”.
