Coinbase to let go 20% of its workforce; shut down several projects

The company will also be shutting down several projects where "we have a lower probability of success", co-founder Brian Armstrong said.

Amid the tough market conditions, Coinbase on January 10 announced plans to lay off 950 employees in a bid to cut its operating expenses by about 25 percent quarter-on-quarter (Q/Q), co-founder Brian Armstrong said in an official blog post.

The company will also be shutting down several projects where "we have a lower probability of success", he said.

This is the second round of layoffs at the crypto exchange after slashing 18 percent of its workforce in June last year, of which 8 percent in India was affected. Armstrong had then stated that the company overhired.

In the blog post, Armstrong said “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."

Impacted employees will be informed today (January 10) and will be provided with a ‘comprehensive package to support you through this transition’, said Armstrong. The employees in the US market will have a minimum of 14 weeks base pay (2 additional weeks per year worked), health insurance, and other benefits.

The blogpost added,“We are also providing extra transition support for impacted employees on a work visa. Those of you outside the US will receive similar support in line with the employment laws of your country.”

In a separate 8K filing, Coinbase estimates it 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.

It also expects to incur approximately $91 million to $95 million in "stock-based compensation expenditures related to the acceleration of the vesting of outstanding equity awards in accordance with the terms of such awards", the company said.

As per the filing, the crypto exchange expects its adjusted EBIDTA losses for the year ending in December 31, 2022 to be within “the negative $500 million loss guardrail” that was set last year.

“As Coinbase grew so quickly in 2021, we all felt the coordination headwind that caused us to move more slowly. Over the past ten years, we, along with most tech companies, became too focused on growing headcount as a metric for success. Especially in this economic environment, it's important to shift our focus to operational efficiency” Armstrong said in the blogpost.