Coinbase to Lay Off a Fifth of Its Workforce: What This Means
Reading Time: 2 minutesCoinbase is about to lay off a fifth of its workforce, but why?
2022 wasn’t a good year for crypto. The bankruptcies, the fall of scandalous firms, and the ruthless crypto contagion rattled the market. Meanwhile, the macroeconomic conditions were also hostile.
In the wake of 2022 and the ongoing crypto winter, many firms are reducing headcounts to cut expenses, and on 10th January 2023, Coinbase announced the lay-off of 950 employees. It comprises a fifth of the company’s workforce, but why is Coinbase cutting so many roles?
Why Is Coinbase Laying Off Hundreds of Employees?
Coinbase Global Inc. laid out a restructuring plan to negate the effect of the crypto crisis. The plan included lay-offs in several phases to control expenses. Since 2022, the firm has slashed jobs twice, and it is the third instance where it has had to let go of its employees. Previously, in June 2022, it laid off over 1,100 employees and then 60 employees in November.
Furthermore, Brian Armstrong, the CEO of Coinbase, mentioned in a Coinbase blog post that lay-offs aren’t enough to cut expenses. The company is also planning to shut down non-profitable projects, and its operations in various countries will likely be affected. Meanwhile, the firm has also filed Form 8-K with the Securities and Exchange Commission, which is a notification that changes are ongoing at the company that may affect shareholders.
The company has taken these measures to slash around 25% of its quarterly expenditures. In addition, it will curb expenditures in several domains, including sales, marketing, administration, tech development, and others.
The Long Crypto Winter and Lay-offs
There is no stopping the crypto winter, which started at the end of 2021. In 2022, a prolonged chain of events stopped bullish trends from taking over.
The implosion of a promising project like Terra blockchain, the bankruptcies of several crypto lenders, the downfall of one of the largest exchanges, FTX, and its contagion are some of the reasons behind the highly volatile market. In addition, the tightening monetary policy, interest rate hikes, and overall macroeconomy have not been favorable.
In this scenario, Coinbase wasn’t the only firm to feel burnt. Various other firms have already taken the step in 2023. For example, on 5th January 2023, Huobi confirmed a 20% slash in its staff, according to Cointelegraph. Also, WSJ reported a 30% cut in Genesis Trading’s workforce.
On the other hand, most crypto assets struggled throughout 2022. Both BTC and ETH shed over 70% of their all-time high values attained in November 2021. Other altcoins, including ADA, LTC, BNB, BUSD, and SOL, also saw substantial price drops. It translated into higher fear among investors and an aggravating crypto crisis.
‘Crypto Isn’t Going Anywhere’
CEO Brian Armstrong has pointed out all these factors for a restructuring plan. However, he believes that ‘crypto isn’t going anywhere.’ Moreover, he stated that Coinbase is ‘well capitalized’ and has experience surviving bear markets.
Armstrong hopes Coinbase can navigate through this winter by focusing on operational efficiency. In addition, he is optimistic that the regulatory clarity and downfall of its competitor, FTX, will likely benefit the company.
Reference: https://www.makeuseof.com/coinbase-to-lay-off-workforce-what-this-means/
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