Coinbase will cut 950 jobs (20% of its workforce) and shut down “several” projects to reduce costs, increasing the company’s chances of success in any situation.
Coinbase co-founder and CEO Brian Armstrong announced Tuesday in a blog post that the crypto exchange had to reduce its workforce by 18%, or 1,100 jobs, as there was “no way to significantly lower expenses without considering changes to headcount.”
The company aims to reduce operating costs by 25% QoQ, estimated to cost $149M – $163M in total restructuring expenses. This includes cash charges of $58-$68M for employee severance & other termination benefits (per 8K SEC filing Tuesday).
Coinbase expects to remain within its “negative $500 million loss guardrail” for 2022, as outlined in last year’s filing.
Facing the market downturn, crypto companies are making drastic decisions to survive. In November, Kraken announced their intention to lay off 30% of staff (1,100 employees). The reversal of gains from the 13-year long bull run has hit these firms hard.
Armstrong warned that the crypto industry is suffering from “unscrupulous actors’ such as Sam Bankman-Fried (FTX) and Kyle Davies/Su Zhu of Three Arrows Capital, with potential for further contagion.
Examining our 2023 scenarios revealed the need to reduce expenses for success in any outcome. With no other way to cut costs significantly, we regrettably had to consider changes in headcount,” he wrote.
Dark times are tough, yet they separate the strong from the weak. Despite this, we at crypto remain steadfast in our mission to build great products and keep promoting economic freedom. We’re ready for what lies ahead – better days – and thank you for your contributions that have brought us here!
Coinbase shares surged 15% to $38.2, but still remain 83% lower than one year ago.
Armstrong revealed that the firm has projects slated for closure due to their lower likelihood of success.