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They popped the corks
for Coinbase's IPO in April last year.
Now the largest crypto exchange in the US is laying off almost a fifth of its workforce.
Photo: John Angelillo / imago images/UPI Photo
Brian Armstrong
(39), CEO and founder of crypto platform Coinbase, lost billions in the recent cyber currency crash.
However, the collapse of Bitcoin and Co is also a burden on his company - he now wants to make it storm-proof in the event of a longer economic downturn in the deepest "crypto winter": Around 1,100 jobs and thus around a fifth of the workforce will be laid off at Coinbase, Armstrong announced an e-mail to the employees.
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Plans with the worst:
Coinbase boss and founder
Brian Armstrong
Photo:
Steven Ferdman/Getty Images
"We appear to be entering a recession after more than 10 years of economic boom," writes the founder.
It is difficult to predict the economy or the markets.
But Coinbase "always plans for the worst so we can run the business in any environment."
Growing too fast in the "bull market".
The recent "crypto winter" would have already led to a significant drop in trading activity.
Sales fell 27 percent in the first quarter, resulting in a net loss of $430 million.
Now Coinbase has to react to this and reduce costs.
"Our staff costs are too high to effectively manage this uncertain market," writes Armstrong.
Coinbase has aggressively hired new employees over the past few years, with the workforce growing by about 1,200 this year alone.
Armstrong then also concedes that Coinbase grew “too fast” during a bull market.
"While we did our best, in this case I now realize that we hired too many people."
The whole industry is cutting jobs
The dismissed colleagues should receive a severance payment of at least 3.5 months' salary for each year of employment.
The largest crypto exchange in the US follows other companies active in the industry that have already made or announced layoffs with their layoff plans.
At the beginning of the week, the competing crypto exchange Gemini and the
crypto loan start-up BlockFi, supported by billionaire
Peter Thiel (54), announced layoffs of 10 percent and more of the workforce.
Open-source tracker Layoffs.fyi, which keeps meticulous accounts of job movements in the tech startup industry, estimates that more than 5,500 jobs were eliminated at startups and tech companies in the US in June alone became.
Cryptocurrencies peaked in early November last year.
But since the US Federal Reserve initiated the turnaround in interest rates and investors' risk appetite rapidly decreased, cyber currencies have also been steadily falling.
Additionally, the collapse of stablecoin Terra and its associated Luna token weighed on confidence.
Since the beginning of the week, investors have been fleeing Bitcoin and other cryptocurrencies in a panic.
Bitcoin has lost more than 60 percent of its value since hitting an all-time high of around $69,000 in November last year.
It slid below $21,000 on Tuesday
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