Hostile Crypto Market Forces Coinbase to Cut Workforce by Around a Fifth Cryptocurrency

Cryptocurrency firm Coinbase is set to make a second round of layoffs, following a drop in revenue.

The exchange platform has proposed to cut 950 positions, equivalent to a fifth of its workforce. The company’s second round of layoffs has been necessitated as the company seeks to cut operating expenses by 25%.

The company also revealed that it expects full-year adjusted EBITDA losses to be below the $500 million “safeguard” set last year.

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Speaking on his proposed redundancy plan, company CEO Brian Armstrong said:

With perfect hindsight, in hindsight, we should have done more. The best you can do is react quickly once the information becomes available, and that’s what we do in this case.

After reviewing various stress tests for Coinbase’s annual revenue, it became clear that we would need to cut expenses to increase our chances of doing well in all scenarios” and there was “no way” to do so. do without downsizing. The company will also close several projects with a “lower probability of success”.

The company said it expects to incur about $149 million to $163 million in restructuring expenses. Its shares reversed course to fall 2.7% premarket after rising more than 5% when the layoffs were announced earlier.

Recall that Coinbase announced layoffs in November last year and cut the jobs of around 60 employees. It comes after wiped 1,100 jobs, or approximately 18% of its workforce, in June of the same year.

Besides Coinbase, other crypto companies like Genesis have also laid off employees. Crypto lender Genesis has cut its workforce by 30% in a second round of layoffs in less than six months.

The collapse of one of the biggest crypto trading platforms, FTX, has been attributed to the recent crisis that rocked several crypto exchanges.

The Coinbase CEO revealed that the collapse of FTX and the resulting contagion has created a black eye for the industry, adding that there are likely more “shoes to drop”.

“We may not have seen the last, there will be increased scrutiny of various companies in the space to ensure they are playing by the rules. In the long run that’s a good thing. But in the short term, there is still a lot of market fear,” he added.

Despite the industry domino effect bankruptcies and a marked drop in trading volume, several investors have argued that the industry is not going away.

On the contrary, they revealed that most of the best companies in the world have grown even stronger thanks to rigorous cost management and have, at some point, gone through an uncertain period.

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