“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,” Armstrong said on a memo.
“The FTX collapse and the resulting contagion has created a black eye for the industry,” he said, adding there’s likely more “shoes to drop.” in an interview to CNBC.
“We may not have seen the last of it — there will be increased scrutiny on various companies in the space to make sure that they’re following the rule”
“Long term that’s a good thing. But short term, there’s still a lot of market fear.”
The company anticipates that the restructuring process will cost between $149 million and $163 million, including cash charges of $58 million-$68 million related to employee severance.
This downsizing follows a similar round of job cuts made last year when the crypto market was in a bear phase. CEO Brian Armstrong explained that the company had grown too quickly during the bull market, leading to the need to reduce expenses in order to increase the company’s chances of success in any market scenario.
“One of the crazy parts about our industry is that in any given year we might be growing 300-500% or -50%. It makes it incredibly challenging to plan and culturally to absorb so many people during up periods.” – CEO Armstrong previously stated on his Official Twitter Account.
In addition to job cuts, Coinbase will also be discontinuing several projects with a “lower probability of success.”
According to CoinDesk, nearly 27,000 jobs have been lost across the crypto industry since April 2020.
The cryptocurrency market has been significantly impacted in recent months due to the fall of one of the industry’s major players, FTX. The incident has led to increased pressure and scrutiny on the sector, with some individuals, such as FTX founder Sam Bankman-Fried, being referred to as “unscrupulous actors” in the industry.
Coinbase Shares Increased 6% After the Announcement.
Shares of Coinbase saw a 6% increase in value after the company announced the job cuts.
While the move will result in a significant reduction in staff, it is expected to also bring cost savings for the company. Investors appear to be taking the news positively, with the stock seeing a significant boost in value following the announcement.
It should be noted that this kind of downsizing is not uncommon in crypto, where volatility is high, and the industry is constantly evolving. A few crypto companies have already announced layoffs, such as Crypto.Com, Gemini, Celsius, and others.