After pausing recruitment a few weeks ago, Coinbase has now announced job cuts affecting 18% of its workforce or some 1,100 people.
The announcement came on Tuesday and was delivered by chief executive Brian Armstrong, who blamed the decision on the “cryptocurrency winter”.
The recent downturn began earlier this year with the crash of Terra USD, and a subsequent drop in Bitcoin (BTC) and other cryptocurrency assets.
“In past crypto winters, trading revenue (our largest revenue source) has declined significantly. While it's hard to predict the economy or the markets, we always plan for the worst so we can operate the business through any environment”, Armstrong explained in a public address.
There has been speculation for a few weeks that Coinbase may resort to this measure, but the company kept quiet until now, hoping to avoid it by freezing recruitment first.
However, many employees have been caught unawares by the abrupt news of layoffs. Armstrong said that employees had been cut off accessing the company’s systems rapidly and sent the messages to their personal emails instead.
This was done, Armstrong explained, to ensure that no employee would act rashly at the news and attempt to do harm to the business.
Coinbase registered a $430m loss in the first quarter of the year, which made some speculate that the company could be close to a bankruptcy. This was mostly denied by Armstrong and Coinbase in another official statement.
However, Armstrong admitted that the company had over-hired and should not have been so aggressive about hiring.
It’s unclear whether Coinbase will be able to fulfil its previous commitment to take its entire staff on a mandatory few-week leave as promised.