Coinbase eliminates 20% of staff in latest round of layoffs
Coinbase Global is firing about 950 employees, or 20% of its workforce, as the worsening crypto slump spurs another round of layoffs at the biggest U.S. digital-asset exchange.
Co-founder and Chief Executive Brian Armstrong announced the job reductions in a blog post Tuesday, saying the steps were needed to weather the industry downturn. In June, Coinbase announced it would lay off 18% of its workforce, the equivalent of roughly 1,200 employees. It eliminated 60 additional positions in November. It will now shut down several projects.
“This is the first time we’ve seen a crypto cycle coincide with a broader economic downturn,†Armstrong wrote in the blog. “We also reduced headcount last year as the market started to correct, and in hindsight, we could have cut further at that time.â€
The company expects to book $149 million to $163 million of restructuring charges, according to a statement Tuesday. The overhaul will be “substantially complete†by the end of the second quarter, it said. As a result, adjusted EBITDA for the full year ended Dec. 31 is expected to be around negative $500 million, within its guidance.
“Coinbase is doing another round of cuts because trading volume remains very weak, especially after the FTX fallout,†said Owen Lau, analyst at Oppenheimer. Although rising rates help its interest income, the company is trying to maintain a certain loss guardrail so that it can survive through this period and emerge stronger on the other side, he said.
Sales of nonfungible tokens soared in January as the assets gained popularity among investors. But as 2022 closes, it’s a completely different story.
Crypto’s bear market is entering its second year, and the industry has suffered a series of meltdowns that hurt its outlook, most lately the bankruptcy of rival exchange FTX. With revenues falling and profits evaporating, companies across the sector have resorted to steep cost cuts in recent months.
Genesis, the troubled crypto brokerage under Barry Silbert’s Digital Currency Group, also made another round of job cuts this month, cutting about 30% of workforce. Crypto exchange Huobi is cutting 20% of jobs, while Silvergate Capital, a crypto-friendly bank, laid off 40% of its staff.
Coinbase’s shares tumbled 86% last year, dropping more than the market bellwether Bitcoin, which slumped 64%. The stock rose 13% Tuesday. The company ended the third quarter with $5 billion in cash and cash equivalents.
“Our preliminary view is that the announcement today will help soften the impact of the challenging environment,†Kyle Voigt, an analyst at Keefe Bruyette & Woods, wrote in a note. But this “likely will not move the company into profitable territory yet.â€
The crypto exchange is facing a federal probe into whether it improperly let Americans trade digital assets that should have been registered as securities
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