Jun 14, 2022 - Economy

Coinbase lays off 1,100 full-time workers over recession fears

Illustration of an exit sign with a person's silhouette forming the "I". 

Illustration: Shoshana Gordon/Axios

Coinbase Global said Tuesday morning that the crypto exchange would lay off roughly 18% of its workforce, or about 1,100 full-time jobs.

Why it matters: Layoffs and rescinded job offers are starting to become more commonplace amid fears of an economic downturn leading to an extended crypto winter.

State of play: Coinbase CEO Brian Armstrong said managing costs would be critical with the possibility of recession leading to a crypto winter, a post published on Coinbase's blog shows.

Meanwhile, other crypto firms are making similar moves.

  • Crypto lender BlockFi on Monday said it was reducing its headcount by about 20%.
  • The Winklevoss brothers' Gemini Trust laid off 10% of its employees. And Crypto.com, the sponsors of an LA sports arena, also downsized.

Yes, but: Others like Binance's CZ said that now's the time for hiring and acquisitions.

The big picture: Coinbase appears to be stuck between the stock market rout and the crunch in crypto.

  • The firm expects to slim down its headcount to a total of roughly 5,000 by the end of June, the company said in a filing.

Flashback: The announcement comes shortly after Coinbase's one-year anniversary as a publicly-traded company.

  • The company went public via direct listing in April 2021 — with its market capitalization hitting $100 billion during what was then considered a wildly successful debut.
  • Its market capitalization has since slimmed down to just under $14 billion.
  • Shares of the company were in decline before the stock market's open on Tuesday.

What they're saying: The bull market and the rapid pace of crypto adoption drove the firm to hire too many people, according to Coinbase.

  • "While we tried our best to get this just right, in this case it is now clear to me that we over-hired," Armstrong said. "Our team has grown very quickly (>4x in the past 18 months) and our employee costs are too high to effectively manage this uncertain market."
  • The firm is offering severance to affected employees and will help them secure new jobs via the firm's venture business as well as other top VC funds.

Our thought bubble: If the biggest publicly traded crypto exchange in the U.S. needs to drop headcount, it is unlikely that smaller crypto firms would be in a position to hire.

Bottom line: There are real people behind these numbers and the human experience of job loss should not be overlooked.

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