Coinbase Global Inc becomes the latest company preparing to ride out a downturn in the crypto sphere as it intends to cut about 1,100 jobs or 18 per cent of its workforce, the cryptocurrency exchange said on Tuesday.
The cryptocurrency market has been roiled by extreme volatility as investors dumped risky assets on fears that higher inflation readings would force the U.S. Federal Reserve to turn more aggressive in raising interest rates and tip the economy into a recession.
“We appear to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter, and could last for an extended period,” Chief Executive Officer Brian Armstrong said in a blog post.
Bitcoin, the world’s largest cryptocurrency, tumbled as much as 14% on Monday after crypto lender Celsius Network froze withdrawals and transfers.
Armstrong said employees would receive an email informing them if they had been affected, without giving further details.
Coinbase had earlier this month said it would extend a hiring freeze and rescind a number of accepted offers to deal with current macroeconomic conditions.
The company’s shares fell about 5% in early trading, set to add to their roughly 80% tumble this year.
The crypto market meltdown has forced companies like BlockFi and Crypto.com to slash hundreds of jobs, while top firms including Meta Platforms and Intel Corp have also tapped the brakes on hiring.
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Coinbase had ramped up hiring when the crypto market scaled new highs during the pandemic, growing headcount by nearly four times in just five quarters.
“This level of headcount growth over five quarters was too ambitious, especially given that the company has lived through a crypto winter and knows how regularly volatile this market can be,” KBW analyst Kyle Voigt said in a note to clients on Monday.
Coinbase expects to incur about $40 million to $45 million in total restructuring expenses, largely related to employee severance and other termination benefits.
(with inputs from agencies)
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