Coinbase is laying off about a fifth of its workers in an effort to ensure liquidity amid the current bear market in cryptocurrencies.
Coinbase, a major U.S. cryptocurrency exchange, is to cut 950 jobs, or about 20% of its workforce, and shut down “many” projects as it seeks to lower costs to improve its “chances of doing well in every scenario.”
The cryptocurrency exchange has cut nearly 1,100 jobs, or 18% of its workforce, since last June. However, according to Brian Armstrong, co-founder and CEO of Coinbase, “there was no way to reduce our expenses significantly enough, without considering changes to headcount.”
The actions are a part of the company’s attempts, according to him, to reduce operating costs by around 25% from one quarter to the next. The business reported (PDF) in an 8K filing with the SEC on Tuesday that it expects to incur around $149 million to $163 million in overall restructuring expenses, consisting of roughly $58 million to $68 million in cash charges relating to employee severance and other termination benefits.
Additionally, Coinbase stated in the filing that it anticipates its adjusted EBIDTA losses for the fiscal year ending December 31, 2022 to fall under “the negative $500 million loss guardrail” it established the previous year.
To survive the slump in the broader market, which has mostly undone the gains from the 13-year bull run, crypto firms, like companies in other industries, are rapidly making important decisions. Kraken announced its intention to fire 1,100 employees, or 30% of the staff, in November.
The founder of the defunct cryptocurrency exchange FTX, Sam Bankman-Fried, and the disgraced founders of the crypto hedge fund Three Arrows Capital, Kyle Davies and Su Zhu, are likely the two people Armstrong was alluding to when he said that the crypto industry is suffering from the fallout from “unscrupulous actors,” and he cautioned that “there could still be further contagion.”
“As we examined our 2023 scenarios, it became clear that we would need to reduce expenses to increase our chances of doing well in every scenario. While it is always painful to part ways with our fellow colleagues, there was no way to reduce our expenses significantly enough, without considering changes to headcount,” he wrote.
“Dark times also weed out bad companies, as we’re seeing right now. But those of us who believe in crypto will keep building great products and increasing economic freedom in the world. Better days are ahead, and when they arrive, we’ll be ready. Thank you for everything you’ve done to get us this far, and everything you will do to carry us forward.”
Armstrong did not say specifically which projects the company planned to end, only that they had a “lower probability of success.” Shares of Coinbase have plummeted by 88% since going public in the second quarter of 2021.