Coinbase Global Inc. announced Tuesday it will lay off 18% of its workforce in another sign of a worsening crypto downturn that’s shaved off trillions of the total cryptocurrency market value.
The largest US digital-asset trading platform is following in the footsteps of other cryptocurrency-related businesses that have recently cut staff, including follow exchange Gemini Trust Co. and lender BlockFi Inc., both of which cited the arrival of a crypto winter — a prolonged market downturn — as the reason for the layoffs.
Coinbase had hired aggressively in recent years, with its workforce ballooning by about 1,200 employees this year.
The company plans to fire roughly that amount, ending the current quarter with about 5,000 employees.
It came under criticism earlier this month for rescinding recently made employment offers.
Coinbase had sought to present an optimistic outlook through the market downturn, even as its shares dropped around 80% since it went public more than a year ago.
Coinbase reported lower-than-expected first-quarter revenue at the start of May, and warned that trading volume and monthly transacting users in the second quarter was expected to be lower than in the first.
A new risk disclosure in its filing triggered concerns among some users about the safety of their crypto assets held in custody by the company in the event of a bankruptcy.
Coinbase CEO @brian_armstrong announced today the difficult decision to reduce the size of the Coinbase team by 18%. More details and rationale in Brian’s email to employees, which has been made public for all to see ➡️ https://t.co/SpdZU3KdpS
— Coinbase (@coinbase) June 14, 2022
Terminated employees will receive a minimum of 3.5 months of severance, plus two weeks for every year of employment.
The layoffs were likely a surprise to many employees, with Coinbase Chief Executive Brian Armstrong saying in a blog post that workers would get a notice sent to their personal email accounts and have access to the company’s network cut off because of their access to sensitive customer information.
The cryptocurrency downturn began soon after Bitcoin hit its all-time-high in November.
Earlier this year, the collapse of the TerraUSD stablecoin and related Luna token erased billions of market gains. In the past week, coin prices plunged after crypto lender Celsius Network froze withdrawals amid what many suspect was a bank-run-like event.
Shares of Coinbase fell less than 1% to $51.58 as of 4:30 p.m. in New York.