As part of cost-cutting measures in a cryptocurrency winter season, Coinbase Global (COIN)has announced plans to lay off 950 employees, 20% of its workforce.
The announcement which was contained in a filing with the U.S. Securities and Exchange Commission (SEC) today, comes as the second staff reduction in less than a year.
In a blog post, Coinbase CEO Brian Armstrong explained that appropriate operational efficiency is needed to weather downturns in the crypto market, and capture opportunities that may emerge.
A part of the Blogpost sighted by Business Elites Africa reads:
“Every year we do our annual planning process where we run different scenarios for revenue: bull, base, and bear. The crypto industry is difficult to predict, but it’s important to have planning in place that ensures we can succeed as a business in multiple potential outcomes.
Over the last decade, Coinbase has made it through multiple bear markets using this process. This is the first time we’ve seen a crypto cycle coincide with a broader economic downturn, but otherwise, it is similar.
As we examined our 2023 scenarios, it became clear that we would need to reduce expenses to increase our chances of doing well in every scenario. While it is always painful to part ways with our fellow colleagues, there was no way to reduce our expenses significantly enough, without considering changes to headcount.
As part of a headcount reduction like this, we will be shutting down several projects where we have a lower probability of success.
Affected teams will receive communication on this today. Our other projects will continue to operate as normal, just with fewer people on the team. We will share more detail publicly on our expense outlook in a public 8-K filing today and on our Q4 earnings call in February.”
The massive plunge in the price of bitcoin and other cryptocurrencies has massively impacted Coinbase, as shares of Coinbase, which went public in April 2021 and hit an all-time high of nearly $370 have since plummeted to about $37– a 90% drop from their peak.
Recall that in June 2022, Coinbase had earlier downsized 18% of its workforce, which affected over 1,000 persons.
The free fall for bitcoin has led to a crisis of confidence in the industry. Several high-profile crypto companies have gone belly up, most notably one-time crypto darling (and Coinbase rival) FTX.
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