Crypto contagion worsens: Coinbase to lay off around 950 employees

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Jan 10 (Reuters) – Coinbase Global Inc (COIN.O) said on Tuesday it would cut around 950 jobs, or 20% of its workforce, as part of a restructuring plan that marks the third round of layoffs for the company. cryptocurrency exchange for the past year.

The company, whose shares rose 3.3% to $39.52, said it expects to incur about $149 million to $163 million in restructuring expenses.

“The entire industry is going through a crisis of confidence and trading volume remains very low. This job cut reflects the current challenging environment,” Oppenheimer analyst Owen Lau said.

Last year, rising interest rates and fears of an economic downturn wiped out over $1 trillion from the crypto sector.

However, the biggest blow came after crypto exchange FTX filed for bankruptcy protection in November.

“We have also seen the fallout from unscrupulous actors in the industry, and there could still be further contagion,” Coinbase Chief Executive Brian Armstrong said in a blog post on Tuesday.

A representation of the cryptocurrency is seen in front of the Coinbase logo in this illustration taken March 4, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

“We will close several projects where we have a lower probability of success.”

Coinbase said it had no further comment on the plan.

“This (job cut) is a move that can contribute to short-term operating leverage,” Mizuho analyst Ryan Coyne said, adding that it would not solve the underlying problem of deterioration. fast volumes.

“It’s going to require much greater cost reductions to accommodate the current volume rate.”

The woes of the crypto industry have continued this year, marked by plummeting filings, layoffs, and multiple legal hurdles.

Coinbase cut more than 60 jobs in its recruiting and institutional onboarding teams in November, after cutting 1,100 jobs, or 18% of its workforce, in June.

Shares in the company lost about 86% of their value last year.

Reporting by Manya Saini and Niket Nishant in Bengaluru; Editing by Saumyadeb Chakrabarty, Shinjini Ganguli and Shounak Dasgupta

Our standards: The Thomson Reuters Trust Principles.

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