Coinbase to lay off 20% of staff as crypto winter continues

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New York CNN—

The crypto winter is apparently not over yet. Coinbase announced on Tuesday that it was laying off 950 people, or about 20% of its staff. The job cuts come just months after another major round of layoffs. The crypto brokerage laid off 1,100 people in June, about 18% of its workforce at the time.

Coinbase, like many other publicly traded and private crypto companies, has been hit hard by the massive drop in the price of bitcoin and other cryptocurrencies. Bitcoin price is hovering around $17,000 after peaking near $65,000 at the end of 2021.

Some crypto fans have been encouraged by bitcoin’s strong start to 2023 so far. eventually bottomed out.

The hope is that the prices of bitcoin and other cryptos could start to stabilize, especially if financial regulators start providing more guidance and clarity on their stance on cryptos. It could mean that the worst is almost over.

Much of the sellout has already opened and the tide could soon change, Naeem Aslam, chief market analyst at AvaTrade, said in a report on Tuesday. He suggested that if bitcoin is able to rally above $20,000, it could revive traders’ confidence.

Still, Bitcoin bulls don’t have much to cheer about yet. Shares of Coinbase, which went public in April 2021 and hit an all-time high of nearly $370 per share later that year, have since fallen to around $43, down nearly 90% from at their top.

The stock rose nearly 13% on Tuesday after the layoffs were announced. Coinbase is now up over 20% so far in 2023.

Coinbase CEO Brian Armstrong pointed out in a blog post on Tuesday that the company is well capitalized and that crypto isn’t going anywhere.

But Armstrong added that the layoffs were necessary because we need to ensure we have the proper operational efficiencies to weather downturns in the crypto market and seize opportunities that may emerge.

Bitcoin’s freefall has led to a crisis of confidence in the industry. Several high-profile crypto companies have gone bankrupt, including former crypto darling (and Coinbase rival) FTX.

The company run by Sam Bankman-Fried was once valued at $37 billion before filing for bankruptcy. Bankman-Fried, or SBF as he is more commonly known, has since been arrested, extradited from the Bahamas and is now awaiting trial in the United States.

SBF has been charged with alleged wire fraud, conspiracy to launder money and several other crimes.

In what could be interpreted as a swipe at FTX and other bankrupt crypto firms, Armstrong said in the blog post that dark times also weed out bad companies, as seen right now.

Armstrong added that we have also seen the fallout from unscrupulous actors in the industry, and there could still be further contagion.

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