Coinbase is cutting off roughly a fifth of its staff, which is nearly 18 percent of full-time positions, as its stock and crypto values plummet.
The cryptocurrency exchange currently employs over 5,000 full-time employees, resulting in a head count drop of approximately 1,100 people.
CEO Brian Armstrong said the possibility of a recession, as well as the necessity to manage Coinbase’s burn rate and boost efficiency. He also said that the corporation expanded “too quickly” during a bull market.
Armstrong said: “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.”
He noted that previous crypto winters have resulted in a considerable drop in trading activity.
He added: “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.”
Coinbase had initially stated it would be freezing recruitment.
Two weeks later, the crypto giant said that the freeze will be extended for the “foreseeable future.”
Coinbase announced earlier this year that it planned to hire 2,000 people in product, engineering, and design.
Armstrong added: “Our employee costs are too high to effectively manage this uncertain market,” Armstrong said. “While we tried our best to get this just right, in this case, it is now clear to me that we over-hired.”
The statement comes at a time when Coinbase shares were in a steep decline. The stock went public through a direct listing last April, during a crypto market boom and investor demand for high-growth tech stocks.
Based in San Francisco, Coinbase reported a drop in users and a 27 percent slide in revenue year over year in its most recent quarter.
The majority of the company’s revenue comes from transaction fees, which are directly related to trading activity.
Given the amount of staff with access to client information, Armstrong termed the layoffs the “only practicable solution” and a means to “ensure not even a single person made a rash decision that harmed the business or themselves.”
Employees at Coinbase will have access to a talent portal to discover new positions in the sector, including portfolio companies of Coinbase Ventures.
COO Emilie Choi said Coinbase will continue to “double down” on areas such as security and compliance, and that staff may be “reoriented” to near-term revenue drivers.
Coinbase has joined several other tech and crypto firms in putting the brakes on recruiting.
BlockFi, a cryptocurrency lender, said on Monday, June 13, that it was laying off 20% of its workforce. The open-source tracker Layoffs.fyi, estimates almost 5,500 start-up and IT jobs were lost in the month of June.
Despite the price reduction, Coinbase has no plans to give more company equity grants or cash incentives.
The firm provides yearly grants in part to help employees “mitigate the swings” and volatility in cryptocurrency.