1. Coinbase (COIN) is letting go of 1,000 employees as part of a critical strategy to weather down the crypto winter.
2. The decision to reduce headcount was made after planning for 2023 and was due to the collapse of the crypto exchange FTX.
3. The layoffs represent a 25% reduction in the company’s operating expenses.
Coinbase, a leading cryptocurrency exchange, is letting go of approximately 1,000 employees as part of a critical strategy to weather the current crypto winter. This is the third round of layoffs for Coinbase, which was founded in 2012 and has survived multiple bear markets, but is now facing the first crypto winter that coincides with a macroeconomic downturn.
The headcount reduction was made after careful planning for 2023 and was largely due to the sudden collapse of crypto exchange FTX. FTX was one of the most prominent players in the crypto industry and its bankruptcy filing in late 2022 had a negative impact on many projects. Coinbase anticipates that other crypto companies and projects will be affected by FTX’s collapse in the coming months, and the decision to cut down their staff was made to protect the company from further contagion.
Brian Armstrong, Coinbase’s CEO, explained the decision to reduce headcount and the motivations behind it. Armstrong said that as part of the process, the company “will be shutting down several projects where we have a lower probability of success.” The layoffs represent a 25% reduction in the company’s operating expenses. Affected teams were given communication about the decision earlier today.
Coinbase is confident that its strategy to ride out the crypto winter will ultimately benefit the company in the long run. Armstrong said that the company’s other projects will continue, and that the decisions made will help Coinbase “weather the storm and come out the other side stronger.”