“Crypto isn’t going anywhere,” Coinbase CEO Brian Armstrong told staffers in a blog post Tuesday morning – but 950 jobs at the biggest U.S. digital-asset exchange are being eliminated.
The cuts are the latest move the company needs to reduce expenses as it confronts the widespread crypto slump, which is happening for the first time during an economic downturn, Armstrong said in the post.
He said Coinbase is “well capitalized,” and he believes “recent events will ultimately end up benefiting Coinbase greatly,” including the spectacular collapse of rival exchange FTX and impending federal regulation of the industry. “But it will take time for these changes to come to fruition and we need to make sure we have the appropriate operational efficiency to weather downturns in the crypto market, and capture opportunities that may emerge,” Amstrong wrote.
The 950 job cuts represent about 25% of the company’s workforce and comes on top of a larger round of layoffs in June, when it cut about 1,100 from the payroll. The company trimmed another 60 in November, Bloomberg reported.
Armstrong took the blame for not making larger cuts six months ago, stating that he wanted to be clear that “while some of the factors that have brought us to this point are beyond our control, accountability rests with me as the CEO. We also reduced headcount last year as the market started to correct, and in hindsight, we could have cut further at that time.”
Those who lose their jobs will receive a minimum of 14 weeks pay severance, including health insurance and other benefits. “We are also providing extra transition support for impacted employees on a work visa,” Armstrong wrote.
The company expects layoffs to be complete by the end of June, and said in a regulatory filing that it will book $149 million to $163 million in restructuring charges related to the layoffs, consisting of approximately $58 million–$68 million in employee severance paid in cash and another $91–$95 million in stock-based compensation. These charges will mostly appear on the company’s first-quarter results, the filing said.
“This is the first time that a down crypto cycle coincide with a broader economic downturn,” Armstrong wrote in his blog post, noting that Coinbase has survived multiple bear markets in the unpredictable crypto industry.
Crypto has seen a two-year bear market and incidences like the meltdown of FTX have put a stain on the industry. Bloomberg noted that other crypto-based businesses, including Barry Silbert’s Digital Currency Group, which eliminated 30% of its headcount, have also announced job cuts. Crypto exchange Huobi cut 20% of its workforce, and crypto-friendly bank Silvergate Capital slashed 40% of its staff.
Coinbase shares gained 3.4% to $39.58 in morning trading, outpacing gains of less than 1% in the broader markets.