Coinbase Global said Tuesday morning that the crypto exchange would lay off roughly 18% of its workforce, or about 1,100 full-time jobs.
Why it matters: Layoffs and rescinded job offers are starting to become more commonplace amid fears of an economic downturn leading to an extended crypto winter.
State of play: Coinbase CEO Brian Armstrong said managing costs would be critical with the possibility of recession leading to a crypto winter, a post published on Coinbase's blog shows.
Meanwhile, other crypto firms are making similar moves.
- Crypto lender BlockFi on Monday said it was reducing its headcount by about 20%.
- The Winklevoss brothers' Gemini Trust laid off 10% of its employees. And Crypto.com, the sponsors of an LA sports arena, also downsized.
Yes, but: Others like Binance's CZ said that now's the time for hiring and acquisitions.
The big picture: Coinbase appears to be stuck between the stock market rout and the crunch in crypto.
- The firm expects to slim down its headcount to a total of roughly 5,000 by the end of June, the company said in a filing.
Flashback: The announcement comes shortly after Coinbase's one-year anniversary as a publicly-traded company.
- The company went public via direct listing in April 2021 — with its market capitalization hitting $100 billion during what was then considered a wildly successful debut.
- Its market capitalization has since slimmed down to just under $14 billion.
- Shares of the company were in decline before the stock market's open on Tuesday.
What they're saying: The bull market and the rapid pace of crypto adoption drove the firm to hire too many people, according to Coinbase.
- "While we tried our best to get this just right, in this case it is now clear to me that we over-hired," Armstrong said. "Our team has grown very quickly (>4x in the past 18 months) and our employee costs are too high to effectively manage this uncertain market."
- The firm is offering severance to affected employees and will help them secure new jobs via the firm's venture business as well as other top VC funds.
Our thought bubble: If the biggest publicly traded crypto exchange in the U.S. needs to drop headcount, it is unlikely that smaller crypto firms would be in a position to hire.
Bottom line: There are real people behind these numbers and the human experience of job loss should not be overlooked.
