Coinbase to Cut 20% in 2nd Round of Big Job Cuts as FTX Rocks Crypto

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Coinbase will cut 20% of its workforce amid a crypto selloff, CEO Brian Armstrong said on Tuesday. This is the second round of significant job cuts after the crypto exchange cut 18% of staff in June. Armstrong blamed “unscrupulous actors” for the crypto headwinds, a possible nod to FTX’s Sam Bankman-Fried. LoadingSomething is being loaded.

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Coinbase will cut 20% of its workforce in a cost-cutting effort to help the exchange weather turmoil in the crypto market, CEO Brian Armstrong said Tuesday.

The crypto exchange plans to cut 950 jobs in a bid to cut its operating expenses by 25%, it said in a blog post.

Armstrong appeared to be referring to disgraced FTX founder Sam Bankman-Fried, who pleaded not guilty to eight criminal charges this month in his article about the job cuts and headwinds facing the industry. cryptography.

“In 2022, the crypto market trended downward along with the broader macro economy,” he said. “We’ve also seen the fallout from unscrupulous players in the industry, and there could still be further contagion.”

“As a result, I have made the difficult decision to reduce our operating expenses by approximately 25% quarter-over-quarter, which includes the layoff of approximately 950 people,” Armstrong added.

This is the second round of major job cuts in months at the crypto giant after cutting its workforce by 1,100 employees, or 18% of its then workforce in June last year. . It had 4,700 employees in September.

“We also reduced headcount last year as the market started to correct, and in hindsight we could have reduced more at that time,” Armstrong said.

Coinbase shares jumped more than 5% pre-market on Tuesday in the immediate wake of the news, but reversed course and traded down 2.7% when last checked.

The stock has fallen 83% in the past 12 months as the crypto experiences a wide and deep selloff. The benchmark S&P 500 index fell 17% over the same period.

Rising interest rates and the collapse of big companies like FTX have rocked the crypto industry over the past year. The price of bitcoin, the largest token by market cap, has fallen 59% since the start of 2022.

US prosecutors are investigating FTX over allegations that its former CEO Bankman-Fried used client funds to support its sister trading company Alameda Research, with around $8 billion missing. FTX’s collapse also spread problems across crypto as it failed to repay loans to now bankrupt lender BlockFi and undermined investor confidence in centralized exchanges.

Coinbase decided to cut the 950 jobs as part of an annual planning process where it modeled bull, bear and benchmark scenarios of the crypto market, according to Armstrong.

“As we looked at our 2023 scenarios, it became clear that we needed to cut spending to increase our chances of doing well in each scenario,” he said.

“Although it is always painful to part with our colleagues, there was no way to sufficiently reduce our expenses without taking into account changes in the workforce.”

The job cuts are part of a restructuring plan that Coinbase expects to complete by the end of June 2023.

In a Securities and Exchange Commission filing released Tuesday, the exchange expects the restructuring to cost between $149 million and $163 million, including a $58 million to $68 million severance payment.

Other crypto firms such as DCG’s Genesis and major exchange Kraken have also downsized in a bid to save money, as FTX’s dramatic implosion continues to rock the industry.

This story has been updated to include more details on Coinbase’s plan.

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