What just happened? Coinbase's CEO has just announced that it's letting go of about 1,100 employees, arguing the company has grown too quickly in the past two years. He also claimed current economic conditions might result in an extended crypto winter, a period when cryptocurrency prices contract and remain low.
Coinbase CEO and co-founder Brian Armstrong has just announced that the company is laying off 18 percent of its staff, equating to about 1,100 employees. This news comes just two weeks after the company extended its hiring freeze and rescinded job offers for an unknown number of new hires. Coinbase is the largest cryptocurrency exchange in the United States by trading volume.
Armstrong suggests that we might be entering a recession, potentially leading to another crypto winter that could last for an extended period. Such a scenario would hit the company's bottom line hard, as most of its revenue comes from trading fees.
1/ Today I shared that I've made the difficult decision to reduce the size of our team at Coinbase by about 18%. The broader market downturn means that we need to be more mindful of costs as we head into a potential recession.— Brian Armstrong - barmstrong.eth (@brian_armstrong) June 14, 2022
The CEO also blamed the rapid rate at which the company has been expanding over the past two years. He claimed Coinbase only had 1,250 employees at the beginning of last year, and that number quadrupled over the past 18 months as the crypto space saw a massive surge in popularity.
Affected employees report that Coinbase cut their access to company systems just before being notified on their personal emails that they were out of a job. Armstrong claimed this was "to ensure not even a single person made a rash decision that harmed the business or themselves."
Cryptocurrency lending platform Celsius also announced a few days ago that it was freezing withdrawals. Meanwhile, El Salvador's Bitcoin holdings have lost half their value due to the recent crypto crash.