Crypto Company To Lay Off More Workers As Cost-Cutting Efforts Continue

Coinbase is another crypto company struggling to make ends meet and it appears more bad news is over the horizon.

According to Coinbase CEO Brian Armstrong on Tuesday, Jan. 10, the company will be laying off 20% of its workforce as a cost-cutting measure tied to the troubles plaguing the crypto market.

In a blog post, Armstrong said that the crypto exchange plans to slash 950 jobs in a bid to reduce its operating expenses by 25%. In the same post, it appeared Armstrong was trying to allude to FTX founder Sam Bankman-Fried.

"In 2022, the crypto market trended downwards along with the broader macroeconomy," he said. "We also saw the fallout from unscrupulous actors in the industry, and there could still be further contagion."

"Therefore, I've made the difficult decision to reduce our operating expense by about 25% quarter-on-quarter, which includes letting go of about 950 people," Armstrong added.

In June last year, the company had trimmed down its workforce by cutting off 1,100 employees or 18% of its staff at the time. As of September, they had 4,700 employees.

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

As a result of that move, the shares of Coinbase temporarily jumped over 5% in premarket trading. However, this would later be reversed with trading seen as 2.7% lower.

Overall, the stock of Coinbase has plummeted 83% over the last 12 months. The benchmark S&P 500 index has fallen 17% over the same period.

The woes that Coinbase is dealing with come not long after rising interest rates and the collapse of major firms such as FTX shook the crypto sector. The price of bitcoin — the largest token by market capitalization — has fallen 59% since the start of 2022.

"As we examined our 2023 scenarios, it became clear that we would need to reduce expenses to increase our chances of doing well in every scenario," Armstrong quipped. "While it is always painful to part ways with our fellow colleagues, there was no way to reduce our expenses significantly enough, without considering changes to headcount."