Cryptocurrency exchange Coinbase is laying off a further 20% of its staff, or 950 employees, in the company’s latest round of layoffs, and reducing its operating expenses by 25%.
Brian Armstrong, Coinbase’s co-founder and chief executive, said today that the decision came during the 2022 crypto market downtrend “along with the broader macroeconomy” and “[w]e also saw the fallout from unscrupulous actors in the industry, and there could still be further contagion.”
This marks the third round of layoffs for the company since last year, beginning with 18% of its staff, about 1,100, in June and 60 more employees in November.
Armstrong commented that the decision was difficult, but it became clear that the company needed to reduce its expenses for 2023 to increase its chances of doing well for the year.
“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,” Armstrong said.
In a filing with the Securities and Exchange Commission, the exchange said that it expected to incur about $149 million to $163 million in restructuring expenses and $58 million to $68 million in charges related to employee severance benefits.
Although, 2021 was a booming year for crypto markets, 2022 saw the onset of a broad downturn better known as “crypto winter,” where cryptocurrencies saw steep drops. Bitcoin lost about 60% of its value between January 2022 to January 2023, falling to $17,300 from $47,000.
Coinbase is currently the second-largest cryptocurrency exchange by volume, according to analysis website CoinGecko, with $1.7 billion in 24-hour volume.
The crypto industry and markets have faced a great deal of turmoil recently with the collapse and bankruptcy of the crypto exchange FTX in November, which was formerly the third largest exchange by volume and a competitor to Coinbase.
Coinbase isn’t the only crypto exchange to sustain layoffs in the first month of 2023. Huobi Global, the sixth-largest exchange by volume ranked by CoinGecko, announced plans to lay off 20% of its staff last week. Cryptocurrency banking platform Silvergate Capital Corp. laid off 40% of its staff Jan. 5 and crypto lender Genesis Global Trading Inc. also cut its staff by 30%, after laying off 20% of its staff in August.
Armstrong noted in his commentary that Coinbase grew very quickly in 2021 and that over the past decade, like most tech companies, it focused too much on growing headcount, and now it’s time to focus on operational efficiency. Also, in spite of the dark times in the industry, he said he’s optimistic about the times ahead.
“Despite everything we’ve been through as a company and an industry, I’m still optimistic about our future and the future of crypto,” Armstrong said. “Just like we saw with the internet, the most important companies not only survive but thrive during down markets by being rigorous with cost management, and continuing to build innovative products.”