On Tuesday, cryptocurrency exchange Coinbase announced it would lay off roughly 950 employees, or 20% of its staff, as part of a reorganisation plan.
Company shares rose 3.3% to $39.52 after the announcement that restructuring costs ranged from $149 million to $163 million.
According to Owen Lau, an Oppenheimer analyst, there is a crisis of trust across the board, and trade activity is deficient. The current economic climate has led to this layoff.
Over a trillion dollars was lost in the cryptocurrency market last year due to increasing interest rates and fears of an economic crisis. More devastating was the November bankruptcy filing by FTX, a cryptocurrency exchange.
Here’s a recap of Coinbase’s layoff announcements since last summer:
– June 2022: 18%, or roughly 1,200 employees
– November 2022: 60 positions
– January 2023: 950 employees https://t.co/nge61PPa1z— Bloomberg Crypto (@crypto) January 10, 2023
According to Coinbase CEO Brian Armstrong, the firm also saw the consequences of dishonest people in the sector, and there might be further contagion. Many of its less promising ongoing projects will be terminated.
Coinbase stated that it has nothing else to add to the discussion. Analyst Ryan Coyne from Mizuho noted that while laying off workers may assist with near-term operating leverage, it wouldn’t address the core problem of steadily declining volumes. To keep up with the present volume run rate, there’s a need to make severe cuts on expenses.
The cryptocurrency industry has struggled this year, as seen by a steep deposit drop, many layoffs, and several regulatory roadblocks.
After laying off 1,100 workers in June (about 18%), Coinbase slashed another 60 employees in November, primarily in its recruiting and institutional onboarding departments.
The company’s shares dropped by almost 86% during the past year.