Coinbase is Cutting 20% of its Staff… Again
Coinbase is once again laying off about 1/5 of their total workforce due to poor macroeconomic situations, and declining trading volumes.
The macroeconomic situation is bad for most companies, and the crypto situation is even worse. On top of lowered guidance, higher expenses, and depressed revenue, companies in the crypto space are dealing with an industry-wide collapse in consumer trust. The side effects of FTX and Sam Bankman-Fried’s fraud is causing a massive outflow of user funds and decline in trading volume–the leading revenue driver for exchanges like Coinbase.
With Coinbase’s sharply declining revenue, they’ve started cutting jobs. Back in June 2022 they cut 18% of their workforce, a relatively big reduction in force (RIF) even among large tech companies who have been on a firing spree. Coinbase has compounded that cut this week by announcing another 20% RIF.
CEO Brian Armstrong is quick to say they made a mistake by growing so quickly during the boom. According to Armstrong, the new wave of layoffs will result in a decline in quarterly expenses of 25%, often a widely loved move by investors.
While Coinbase is still considered the gold standard for centralized crypto exchanges, that hasn’t saved it from the fall out. Coinbase is the only major exchange that is publicly traded in the United States, and due to that extra level of scrutiny has been able to hold onto consumer trust better than anyone else. Binance in comparison has reportedly lost some $12B in the past two months.
Armstrong puts much of this blame on FTX and SBF, saying “The FTX collapse and the resulting contagion has created a black eye for the industry” and pointing out that more things are likely to come of it, including regulation.
I think unless the macroeconomic situation improves significantly, further RIFs at Coinbase are likely. Coinbase is a company that thrives when consumer sentiment is high and individuals believe in the future of crypto–it sure doesn’t feel like either of those are accurate right now.