US crypto giant, Coinbase has revealed plans to cut down its current workforce by 20% or cut off 950 jobs in an attempt to weather the storms bedeviling the crypto market which has led to downturns.
Armstrong did not identify which initiatives the company intends to terminate, but he did say that those projects had a “lower likelihood of success.”
Unfortunately, this is the second round of major layoffs at the cryptocurrency exchange, as 18% of its workforce, or nearly 1,100 jobs, were eliminated in June. However, there was “no way to reduce our expenses significantly enough, without considering changes to headcount,” Coinbase co-founder and CEO Brian Armstrong wrote in a blog post on Tuesday.
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According to him, the actions are part of the company’s aim to reduce operating expenses by around 25% from quarter to quarter. The business expects to incur between $149 million and $163 million in overall restructuring expenses, including between $58 million and $68 million in cash charges related to employee severance and other termination payments, according to a Tuesday 8K filing with the SEC.
In the filing, Coinbase also disclosed that it anticipates its adjusted EBIDTA losses for the fiscal year ending December 31, 2022, to fall inside “the minus $500 million loss threshold” it established the previous year.
However, this is not a move peculiar to Coinbase alone as other corporations both within and in other industries are towing the same line of action. Crypto firms are quickly implementing important decisions to survive the market downturn, which has erased a significant portion of the 13-year bull run’s gains. Kraken said in November that it will lay off 1,100 employees, or 30 percent of its staff.
Armstrong said the crypto industry is reeling from the fallout from “unscrupulous actors,” likely referring to Sam Bankman-Fried, the founder of the collapsed crypto exchange FTX (which stole billions of dollars of customer funds), and disgraced crypto hedge fund Three Arrows Capital founders Kyle Davies and Su Zhu, and warned 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.”
Coinbase’s shares price has decreased by 83% during the past year.
Armstrong did not identify which initiatives the company intends to terminate, but he did say that those projects had a “lower likelihood of success.”
