According to an 8-K filed on Tuesday June 14, one of the world’s largest cryptocurrency startups, Coinbase, is laying off nearly 18 percent of its personnel. This comes as the crypto market continues to be battered by prospects of more aggressive Federal Reserve interest rate hikes. According to the filing, the reduction will reduce the company’s staff by 1,100 individuals, bringing the total to 5,000 by June 30.
According to Coinmarketcap, the entire value of crypto assets has dropped by 25% in the last month. Crypto’s value has plummeted from $1.24 trillion to $929 billion as of Tuesday morning, adding to the ongoing barrage of bad news for crypto.
“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. In past crypto winters, trading revenue (our largest revenue source) has declined significantly,” Coinbase Founder and CEO Brian Armstrong stated in a post announcing the layoffs. “We grew too fast,” Armstrong continued.
Armstrong did mention that there are positives for Coinbase in the long term, noting that it has survived four previous crypto winters. He noted that their ongoing success is thanks to changing spending habits during those periods and by adapting their mindset to meet market conditions.
Across the crypto industry, layoffs are becoming more common. Blockfi, a cryptocurrency lender, and Crypto.com, a cryptocurrency exchange, both announced major layoffs on Monday. Each company individually cited the downturn in the market and a bleak forecast for the rest of 2022. BlockFi is set to lay off 20% of its employees, while Crypto.com is decreasing its workforce by 5%.
Coinbase also announced last month that it would suspend hiring and cancel certain job offers. This news comes as a far cry from the company’s original goal of doubling its personnel by the end of the year. According to the filing, the layoffs will cost “roughly $40 million to $45 million” in restructuring costs, although the firm did not change its expectation from May when it reported its most recent quarterly earnings.
As for those who unfortunately were affected by Coinbase’s layoffs, they will be relieved to know that the job termination package includes at least 14 weeks of severance money, four months of Cobra health insurance, and access to the company’s Talent Hub.
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