Coinbase Global Inc said on Tuesday that it will reduce roughly 1,100 employees, or 18 percent of its workforce, as the cryptocurrency exchange prepares to weather a slump in the market.
The cryptocurrency market has been roiled by severe volatility as investors sold riskier assets, fearing that higher inflation readings will compel the US Federal Reserve to raise interest rates more aggressively, tipping the country into recession.
Coinbase Slashes Several Jobs
As per the sources, Chief Executive Officer Brian Armstrong said that after a ten-year economic boom, they appear to be facing a recession. Another crypto winter might be triggered by a recession, which could endure for a long time.
After crypto lender Celsius Network banned withdrawals and transfers, Bitcoin, the world’s largest cryptocurrency, fell as high as 14% on Monday.
Employees will receive an email telling them if they were affected, according to Armstrong, who did not provide any details. To deal with current macroeconomic conditions, Coinbase said earlier this month that the company will extend a hiring freeze and cancel several accepted offers.
Crypto Winter Ends
The company’s stock dropped almost 5% in early trading, adding to a year-to-date decline of about 80%. Corporations like BlockFi and Crypto.com have had to cut hundreds of positions as a result of the crypto market crash, while prominent companies like Meta Platforms and Intel Corp have also put the brakes on hiring.
When the crypto market reached new highs during the pandemic, Coinbase accelerated hiring, virtually quadrupling its personnel in only five quarters.
As per the sources, KBW analyst Kyle Voigt said that this degree of headcount expansion over five quarters was overly optimistic, especially considering the company’s experience with a crypto winter and knowledge of how volatile this market can be daily.
Total restructuring costs are expected to be in the range of $40 million to $45 million, with the majority of the costs relating to employee compensation and other termination benefits.
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