Coinbase's won't be the last of the crypto layoffs
When Coinbase announced its hiring freeze on May 17, Axios asked the company if layoffs were coming next. A spokesperson at the time said no, it was just a slow down. This morning, Coinbase announced layoffs.
Driving the news: CEO Brian Armstrong said the company had grown too quickly ahead of an oncoming recession and would shed about 18% of its workforce.
Why it matters: Companies that raised aggressively in the past two or three years are giving assurances that their business is well-capitalized, with multi-year long runways. Those assurances should be taken with a grain of salt.
Context: Coinbase grew aggressively during the pandemic. It had about 1,249 employees at the end of 2020, which exploded into 3,730 by the end of 2021.
- Coinbase planned to hire thousands more this year but the crypto market stalled, investors got scared, and the company began rescinding offers and pausing hires.
- As of Q1, it had 4,948 employees, meaning the layoffs will affect around 1,100.
Of note: Coinbase is hardly alone, with industry watchers saying more layoffs are likely to come.
- Just yesterday, crypto lender BlockFi said it would cut its headcount by about 20%. (The company last had an estimated 850 employees). There was also Crypto.com's 260-person reduction last week.
- More traditional fintech companies are axing jobs, too. In a recent note to employees, seen by Axios, TIFIN revealed it laid off 21 U.S. employees — or about 10% of its workforce, while executives took a 20% pay cut. Freetrade and Albert also made cuts of their own late last week.
Bottom line: The crypto industry's layoffs will range from companies culling 5%, out of an abundance of caution, to others cutting 20% because they got over their skis last year, says Scott Fletcher of crypto-focused executive search firm Intersection Growth Partners.