Cryptocurrency trading platform, Coinbase, has announced plans to reduce its workforce by 950, citing bad market conditions.
In a filing with the U.S. Securities and Exchange Commission (SEC) on Tuesday, the company explained that the layoffs are part of its cost-cutting measures. Nairametrics gathered that it will be completed by the second quarter of this year.
The company added that the reduction of staff will reduce its operating expenses by 25% quarter on quarter. All affected staff will be informed of their fate today.
This will make it the second time the company is laying off in less than a year. In June 2022, Coinbase slashed 18% of its workforce in an exercise that affected nearly 1,100 workers of the company.
How Coinbase got here: Explaining the circumstances that led to the company laying off twice in less than 12 months, Coinbase Coinbase co-founder and CEO, Brian Armstrong, said this in a blog post:
- “I’d like to explain how we got here, what it will mean for those impacted, and how we’ll move forward. I also want to be clear that, while some of the factors that have brought us to this point are beyond our control, accountability rests with me as the CEO.
- “We also reduced headcount last year as the market started to correct, and in hindsight, we could have cut further at that time.”
- “Every year we do our annual planning process where we run different scenarios for revenue: bull, base, and bear. The crypto industry is difficult to predict, but it’s important to have planning in place that ensures we can succeed as a business in multiple potential outcomes. Over the last decade, Coinbase has made it through multiple bear markets using this process. This is the first time we’ve seen a crypto cycle coincide with a broader economic downturn, but otherwise, it is similar.
- “As we examined our 2023 scenarios, it became clear that we would need to reduce expenses to increase our chances of doing well in every scenario. While it is always painful to part ways with our fellow colleagues, there was no way to reduce our expenses significantly enough, without considering changes to headcount,” he explained.
Armstrong added that as part of the headcount reduction, the company would also be shutting down several projects where it has a lower probability of success.
- “Affected teams will receive communication on this today. Our other projects will continue to operate as normal, just with fewer people on the team,” he said.
Impacts on the company: The SEC filing shows that Coinbase will incur approximately $149 million to $163 million in total restructuring expenses, consisting of approximately $58 million to $68 million in cash charges related to employee severance and other termination benefits.
Of the aggregate charges that the Company expects to incur in connection with the Plan, the Company expects that approximately $91 million to $95 million will be in stock-based compensation expenditures relating to the acceleration of the vesting of outstanding equity awards in accordance with the terms of such awards. The Company expects to recognize substantially all of these charges in the first quarter of 2023.
