Amidst bearish market sentiments, leading crypto exchange Coinbase has announced it is slashing 18 percent of its workforce, or about 1,100 employees, contending that recession is about to begin after a 10-year economic boom. Recession, it believes, could last for an extended period.
In a note shared with employees, Coinbase CEO Brian Armstrong said that, at the beginning of 2021, the company hired massively to keep up with the new use cases enabled by crypto getting traction practically every week.
“.. it is now clear to me that we over-hired,” he 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 actions we are taking today will allow us to more confidently manage through this period even if it is severely prolonged,” Armstrong said.
The cofounder further added that, for the past few months, adding new employees made the organisation less efficient and slowdowns were seen due to coordination headwinds, along with difficulties in fully integrating new team members.
Binance only exception
Coinbase joins a string of companies that have announced a significant slashing of headcounts. One of the largest crypto exchanges, Binance, remains an exception.
Cryptocurrency exchange Crypto.com CEO Kris Marszalek has announced laying off about 260 people, or 5 percent of its corporate workforce, while cryptocurrency lender BlockFi will reduce its staff by around 20 percent.
Earlier this month, crypto exchange Gemini had cut down 10 percent of its staff, citing the ongoing crypto downturn, alongside macroeconomic and geopolitical factors.
In April, crypto derivatives platform BitMEX had laid off 75 employees, about a quarter of its workforce, while Argentinian exchange Buenbit laid off 80 employees, almost half of its roster. Latin America’s Bitso also let go of 80 employees, representing 11 percent of its personnel.
Meanwhile, Binance continues to hire new employees, with about 2,000 positions open across departments for engineers, product, marketing, and business developers.
Sam Bankman-Fried, co-founder of crypto exchange, FTX, tweeted: “We're at about 300 now and growing, but sustainably--some come, some go, but we're increasing ~50 percent year over year.”“Maybe we'll get to 400 in the next year. But when it comes to hypergrowth, you can't replace 'growing revenue' with 'growing expenses',” he said in another tweet.