Coinbase founder and CEO Brian Armstrong attended Consensus 2019 at the Hilton Midtown on May 15, 2019 in New York City.
Stephen Friedman | Getty Images
Coinbase is laying off nearly a fifth of its workforce amid a collapse in its inventory and crypto prices.
Crypto exchange will cut 18% of full-time jobsAnd the According to an email sent to employees Tuesday morning. Queen Piece It has nearly 5,000 full-time workers, which translates to a staff reduction of about 1,100 people.
Coinbase shares are up about 1% before the markets open.
CEO Brian Armstrong pointed to a possible recession, the need to manage Coinbase’s burn rate and increase efficiency. He also said the company had grown “very, very quickly” during a bull market.
“It looks like we are entering a recession after an economic boom of more than 10 years. The recession could lead to another crypto winter, and it could go on for a long time,” Armstrong said, adding that past crypto winters have led to a significant drop in trading activity. “While it is difficult to predict the economy or the markets, we always plan for the worst so that we can manage the business through any environment.”
Coinbase initially said it was temporarily halting hiring. Two weeks later, the crypto giant announced that it was extending the freeze for the “foreseeable future.” Earlier this year, Coinbase He said I plan to add 2,000 jobs across products, engineering, and design.
“Our personnel costs are too high to effectively manage this uncertain market,” Armstrong said. “While we have been doing everything we can to get this completely right, in this case it is now clear to me that we have hired too much.”
The news comes during a deep trajectory for Coinbase stocks. The stock went public through a direct listing last April during a boom in the cryptocurrency markets and investors were clamoring for high-growth technology stocks. Coinbase stock is down 79% this year and 85% from an all-time high. Meanwhile, bitcoin has dropped to nearly $22,000 and has lost 53% of its value this year.
San Francisco-based Coinbase reports a 27% drop in users in the last quarter drop in revenue compared to last year. The company makes the majority of its profits from transaction fees, which are closely related to trading activity.
Employees of Coinbase Global Inc, the largest cryptocurrency exchange in the United States, watch as they display their listing on the Nasdaq MarketSite jumbotron in Times Square in New York, US, April 14, 2021.
Shannon Stapleton | Reuters
The president and chief operating officer, Emily Choi, called it a “very difficult decision for Coinbase” but given the economic background, “I felt it was the wisest thing to do now.”
Affected employees have received notification from Human Resources. If so, the memo was sent to a personal email where Coinbase cut off access to the company’s systems. Armstrong called it “the only viable option” given the number of employees who have access to customer information, and a way “to ensure that no one person makes a hasty decision that harms the company or themselves.”
Coinbase employees will be able to access the talent center to find new jobs in the industry, including Coinbase Ventures portfolio companies. Choi said they will continue to “redouble their efforts” in areas such as security and compliance and possibly “redirect” employees toward revenue drivers in the near term.
“If there are any cutbacks in new product areas, it will be more around the pilot project areas that we’re still very optimistic about, but we don’t want to invest in this part of the cycle,” Choi told CNBC. In an interview at the company’s headquarters.
“We will continue to invest in incredibly innovative areas of cryptocurrency that we believe are emerging over the long term, but potentially do so in a much more deliberate manner in this type of environment.”
Coinbase is joining dozens of other tech and crypto companies that are curbing the hiring process. Cryptocurrency lender BlockFi says it has been cut off 20% of its employees on Monday. Open source tracking software Layoffs.fyi Estimates More than 5,500 start-up and tech jobs were cut in June alone.
Choi said Coinbase’s intention is “for this to be a one-time event,” adding that the company has $6 billion in cash on its balance sheet. The company has lived through several bear markets in cryptocurrency before, also known as “crypto winter.”
“We’ll work through any macro environment, any crypto winter, whatever is coming,” she said. “But the reality is that we have to adapt when we feel there is a very dynamic economic environment at play.”
Technology companies were fighting Low morale and attrition as their shares come under criticism. Last week, a petition to a decentralized publishing platform called for removal and a “vote of no confidence” in relation to several Coinbase executives, including Choi.
Coinbase Brian Armstrong has since drawn attention to the deleted petition, in a tweet urging employees to resign if they do not believe in the company.
“We will always encourage our employees to share feedback internally about how we operate as a company – and we have a number of mechanisms in place for them to do so,” Choi said. “It is largely unclear whether this document came from within the company.” . “However, if it does, we are disappointed that those behind it felt the need to breach the trust of the company and their co-workers by sharing this information in a manner clearly designed to generate controversy rather than meaningful dialogue.”
Choi said Coinbase has no plans to offer additional stock grants, or cash compensation amid the price drop. The company provides annual grants, in part so that employees can “mock down” and volatility in cryptocurrencies. For employees and investors, the COO likened him to Amazon or TeslaA long-term investment with volatility at the moment.
“We believe that anyone who makes an investment, whether they are an employee or an investor, will get a good return in the long run,” Choi said. “Coinbase is a long-term game – we have a very deep belief in the long-term value of the stock.”
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