Coinbase to cut 20% jobs, abandon ‘several’ projects to weather downturns in crypto market

In order to lower its costs and improve its “chances of doing well in every scenario,” Coinbase wants to eliminate 950 jobs, or around 20% of its workforce, and shut down “multiple” initiatives.

The cryptocurrency exchange has slashed roughly 1,100 employees, or 18% of its workforce, since last June. However, according to Brian Armstrong, co-founder and CEO of Coinbase, “there was no way to lower our expenses dramatically enough, without considering changes to personnel.”

According to him, the actions are a part of the company’s efforts to reduce operating costs by around 25% from one quarter to the next. The business reported (PDF) in an 8K filing with the SEC on Tuesday that it expects to incur around $149 million to $163 million in overall restructuring expenses, consisting of roughly $58 million to $68 million in cash charges relating to employee severance and other termination benefits.

Additionally, Coinbase stated in the filing that it anticipates its adjusted EBIDTA losses for the fiscal year ending December 31, 2022 to fall under “the negative $500 million loss guardrail” it established the previous year.

To survive the slump in the broader market, which has mostly undone the gains from the 13-year bull run, crypto firms are rapidly making important decisions, much like businesses in other industries. Kraken announced its intention to fire 1,100 employees, or 30% of the staff, in November.

The founder of the defunct cryptocurrency exchange FTX, Sam Bankman-Fried, and the disgraced founders of the crypto hedge fund Three Arrows Capital, Kyle Davies and Su Zhu, are likely the two people Armstrong was alluding to when he said that the crypto industry is suffering from the fallout from “unscrupulous actors,” and he cautioned that “there could still be further contagion.”

“As we looked at our scenarios for 2023, it became evident that we would need to cut costs in order to improve our chances of succeeding in each scenario. Even though it is always difficult to part ways with coworkers, there was no way to cut our costs sufficiently without taking headcount fluctuations into account, he wrote.

Dark times also weed out bad businesses, as we can see at the moment. However, those of us who are crypto believers will continue to create fantastic goods and expand economic freedom globally. Better times are coming, and we’ll be ready when they do. I appreciate everything you’ve done to help us come this far and everything you’ll do to continue to help us.

In the last year, shares of Coinbase have decreased by 83%.

Armstrong did not say specifically which initiatives the company planned to end, only that they had a “reduced probability of success.”