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Jun 14, 2022

Coinbase to lay off 18% of workers as crypto winter worsens

Bitcoin trading lower today

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Coinbase Global Inc. announced Tuesday will lay off 18 per cent of its workforce in another sign of a worsening crypto downturn that’s shaved off hundreds of millions of the total cryptocurrency market value.

The largest US digital-asset trading platform is following in the footsteps of other cryptocurrency-related businesses that have recently cut staff, including follow exchange Gemini Trust Co. and lender BlockFi Inc., both of which cited the arrival of a crypto winter -- a prolonged market downturn -- as the reason for the layoffs.

Coinbase had hired aggressively in recent years, with its workforce ballooning by about 1,200 employees this year. The company plans to fire roughly that amount, ending the current quarter with about 5,000 employees. It came under criticism earlier this month for rescinding recently made employment offers. Coinbase had sought to present an optimistic outlook through the market downturn, even as its shares dropped around 80 per cent since it went public more than a year ago. 

Coinbase reported lower-than-expected first-quarter revenue at the start of May, and warned that trading volume and monthly transacting users in the second quarter was expected to be lower than in the first. A new risk disclosure in its filing triggered concerns among some users about the safety of their crypto assets held in custody by the company in the event of a bankruptcy. 

Terminated employees will receive a minimum of 3.5 months of severance, plus two weeks for every year of employment.

The cryptocurrency downturn began soon after Bitcoin hit its all-time-high in November. Earlier this year, the collapse of the TerraUSD stablecoin and related Luna token erased billions of market gains. In the past week, coin prices plunged after crypto lender Celsius Network froze withdrawals amid what many suspect was a bank-run-like event.

Shares of Coinbase fell less than 1 per cent to US$51.58 as of 4:30 p.m. in New York.   

Other Recent Reductions:

BlockFi Inc. 

  • 20 per cent of employees

Crypto.com 

  • Five per cent of employees

Gemini Trust Co.

  • 10 per cent of employees