Crypto exchange Coinbase is making a third round of workforce cuts in the past seven months, this time affecting around 950 employees.
The cuts amount to 20% of its staff and were announced Tuesday in a blog post by CEO Brian Armstrong.
Armstrong attributes the cuts to the downturn in the crypto market and “the fallout from unscrupulous actors in the industry.” The post does not refer to current or former FTX executives by name but asserts “there could still be further contagion.”
In a filing Tuesday with the Securities and Exchange Commission (SEC), Coinbase said it will pay between $149 million and $163 million in restructuring costs. That includes $58 million to $68 million in cash charges for employee severance and termination benefits and $91 million to $95 million in expenditures paid out as stock-based compensation.
“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 said. “[T]here was no way to reduce our expenses significantly enough, without considering changes to headcount.”
Coinbase has cut 2,110 workers since June, and said it expects to cut operating expenses by 25% in the first quarter. News of cuts at crypto companies have been arguably frequent in recent months. A running CoinDesk tally indicates more than 26,000 crypto jobs vanished between April to December.
Last week, crypto brokerage Genesis cut 30% of its staff, or 60 employees, and crypto-focused bank Silvergate Bank cut 40% or 200 people. Last month, international exchanges Swyftx and Bybit saw steep cuts, and Kraken cut 1,100 at the end of November.
Still, Armstrong said Coinbase is well-capitalized, and “crypto isn’t going anywhere.”
He added that recent events, like the failure of “a large competitor” and regulatory clarity, will benefit Coinbase in the end and validate its long-term strategy.
“But it will take time for these changes to come to fruition and we need to make sure we have the appropriate operational efficiency to weather downturns in the crypto market, and capture opportunities that may emerge,” he said.
Affected U.S. employees will receive at least 14 weeks’ pay with two additional weeks per year worked, along with health insurance and other benefits. Employees on a work visa will receive transition support. Workers outside of the U.S. will receive benefits in line with the employment laws of their respective countries.
“Despite everything we’ve been through as a company and an industry, I’m still optimistic about our future and the future of crypto,” Armstrong said. “Progress doesn’t always happen in a straight line, and sometimes it can feel like we’re taking two steps forward and one step back.”
Coinbase, which Armstrong founded in May 2012, has survived other crypto winters. He notes that the current one is different because it coincides with a broader economic downturn.
“Just like we saw with the internet, the most important companies not only survive but thrive during down markets by being rigorous with cost management, and continuing to build innovative products,” Armstrong said.
