Coinbase Lets Go of 18% of its Workforce as ‘Crypto Winter’ Looms

Coinbase announced this week that it has laid off 18% of its workforce as executives prepare for recession and a crypto winter.

The company’s CEO Brian Armstrong pointed to a possible recession, a need to manage costs and growing “too quickly” during a bull market.

“We appear to be entering a recession after a 10+ year economic boom,” Armstrong said. “While it’s hard to predict the economy or the markets, we always plan for the worst so we can operate the business through any environment.”

The company’s COO said it intends for the lay-offs to be a ‘one-time’ event. President and Chief Operating Officer Emilie Choi called it a “very difficult decision for Coinbase” but given the economic backdrop, she said it “felt like the most prudent thing to do right now.”

According to an email sent to employees Tuesday morning, the company is laying off almost a fifth of its workforce amid a collapse in its stock and crypto prices.

Coinbase has roughly 5,000 full-time workers, translating to a head count reduction of around 1,100 people.

Armstrong pointed to a possible recession, and a need to manage Coinbase’s burn rate and increase efficiency. He also said the company grew “too quickly” during a bull market.

Coinbase had initially said it was pausing hiring but said it was extending the freeze for the “foreseeable future.” Earlier this year, Coinbase said it planned to add 2,000 jobs across product, engineering and design.

“Our employee costs are too high to effectively manage this uncertain market,” Armstrong said. “While we tried our best to get this just right, in this case it is now clear to me that we over-hired.”

Coinbase went public via a direct listing last April during a boom in crypto markets and investors clamoring for high-growth tech stocks. Coinbase’s shares are down 79% this year and 85% from the all-time high.

“If there are any cuts to new product areas, it’s going to be more around experimental venture areas that we’re still very bullish on, but that we don’t want to invest in in this part of the cycle,” Choi told CNBC in an interview at the company’s headquarters.

“We will continue to invest in incredible innovative areas of crypto that we think are emerging over the longer term, but we’re probably going to do those in a more measured way in this type of an environment.”

“We will always encourage our employees to share feedback internally on how we operate as a company — and we have a number of mechanisms in place for them to do so. It’s very much unclear if this document came from within the company,” Choi said. “However, if it did, we’re 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 way clearly designed to drive controversy rather than a meaningful dialogue.”

“We think that anyone who makes an investment, whether they’re an employee or investor, will have a handsome return over the longer term,” Choi said. “Coinbase is a long-term play — we have very deep conviction in the long-term value of the stock.”

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.