The company will cut 18 percent of full-time jobs or around around 1,100 people. (Related: Crypto CONTAGION spreads as Ponzi-like elements of the crypto ecosystem start unwinding uncontrollably.)
CEO Brian Armstrong justified the layoffs by pointing to a possible recession and a need to manage the company's burn rate and increase efficiency. He also said the company grew "too quickly" during cryptocurrency's rise.
"We appear to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter, and could last for an extended period," wrote Armstrong in an email announcing the layoffs. He noted that past crypto winters resulted in a significant decline in trading activity.
"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."
This is a departure from two weeks ago when the company said it will pause hiring without laying off any staff. Along with the mass layoff, Coinbase said it was extending its hiring freeze for the "foreseeable future."
"Our employee costs are too high to effectively manage this uncertain market," said Armstrong. "While we tried our best to get this just right, in this case it is now clear to me that we over-hired."
Following the layoffs, Coinbase expects to have around 5,000 staffers remaining. Laid-off employees will get at least 14 weeks of severance pay.
Coinbase went public via direct listing last April during a boom in the crypto market. Since then, the company's shares have dropped by 79 percent this year and 85 percent from its all-time high.
Meanwhile, the value of cryptocurrencies is crashing. As of press time, bitcoin's value has plummeted to below $22,000 for the first time since December 2020.
Coinbase is just the latest company in the cryptocurrency industry to announce layoffs.
BlockFi, a cryptocurrency trading and lending platform, announced that it is shrinking its 850-strong workforce by 20 percent, affecting around 170 people. CEO Zac Prince said the layoffs can be blamed on the "dramatic shift in macroeconomic conditions" and the push for the company to remain profitable.
Crypto.com, a Singapore-based cryptocurrency exchange, announced "targeted reductions" of about five percent of its workforce, or 260 jobs.
Mercado Bitcoin, Latin America's largest cryptocurrency exchange by trading volume, announced a 12 percent reduction in staff. This constitutes around 750 workers. 2TM, the company that owns Mercado Bitcoin, cited "changes in the global financial landscape" as justification for its mass layoff.
Bitso, the largest exchange in Mexico and second-largest in Latin America behind Mercado Bitcoin, announced that it was firing 10 percent of its staff – 80 employees – citing tightening conditions affecting the industry.
Gemini, a New York-based cryptocurrency exchange and holding company owned by Cameron and Tyler Winklevoss, cut 10 percent of its staff earlier in June, citing the effects of the market downturn.
Buenbit, one of the leading cryptocurrency investment platforms in Argentina took far more drastic measures and shrank its workforce by 45 percent, from about 180 to 100 full-time workers.
"After a 2021 exponential growth for the tech industry, we find ourselves going through a global review stage," wrote Buenbit CEO Federico Ogue. "Given this new context, we decided to reduce staff and put on hold our expansion plan to focus exclusively on the operation of the countries where we are present today and maintain a self-sustaining and efficient structure."
Other cryptocurrency companies are looking into restructuring options, which may include layoffs.
Celsius Network LLC, one of the largest cryptocurrency lenders, recently hired attorneys to advise the company on solutions for its mounting financial troubles. Because of "extreme market conditions," the company has already told users that it was pausing all withdrawals, swaps and transfers between accounts, basically freezing the assets of all of the company's clients.
Learn more about the collapse of the cryptocurrency market at CryptoCult.news.
Watch this episode of the "Health Ranger Report" as Mike Adams, the Health Ranger, explains how the collapse of the cryptocurrency market is occurring at the same time the value of stocks, bonds and real estate are also crashing.