Coinbase to Slash 20% of Workforce and Abandon ‘Several Projects’

The cryptocurrency industry was hit with more bad news on Tuesday when Coinbase announced it is cutting about a fifth of its workforce as it looks to preserve cash during the crypto market downturn.

Coinbase shares are trading flat in the pre-market trade after jumping more that 15% on Monday after analysts said it can benefit from FTX’s demise.

In making the move to downside its operation, Coinbase joins a throng of other major tech players slashing jobs after going on a hiring binge during the pandemic. Other crypto firms that have announced similar job cuts recently include Genesis, Gemini, and Kracken.

They join the likes of on-line retailer Amazon, which said last week it would cut 18,000 jobs, more than the company initially estimated last year. Meanwhile, Salesforce reduced it headcount by more than 7,000, or 10%. Additionally, Elon Musk slashed about 50% of Twitter’s workforce after taking control of the company late last year. Finally, Meta reduced its workforce by more than 11,000 jobs or 13%.

Coinbase Seeks to Reduce Expenses

Coinbase announced it is cutting about 950 jobs, according to a blog post published Tuesday morning. The exchange, which had roughly 4,700 employees as of the end of September, already slashed 18% of its workforce in June citing a need to manage costs and growing “too quickly” during the bull market.

Coinbase CEO Speaks

“With perfect hindsight, looking back, we should have done more,” CEO Brian Armstrong told CNBC in a phone interview. “The best you can do is react quickly once information becomes available, and that’s what we’re doing in this case.”

After looking at various stress tests for Coinbase’s annual revenue, Armstrong said “it became clear that we would need to reduce expenses to increase our chances of doing well in every scenario” and there was “no way” to do so without reducing headcount. The company will also be shutting down several projects with a “lower probability of success.”

“Every company in Silicon Valley felt like we were just focused on growth, growth, growth, and people were almost using their headcount number as a symbol of how much progress they were making,” Armstrong said. “The focus now is on operational efficiency – it’s a healthy thing for the ecosystem and the industry to focus more on those things.”

CEO Armstrong Looks for Crypto Industry to Strengthen

Despite the crypto industry’s massive string of bankruptcies and a marked drop in trading volume, Armstrong was steadfast in arguing that the industry isn’t going away.

“If you look at the internet era, the best companies got even stronger by having rigorous cost management,” CEO Armstrong said. “That’s what’s going to happen here.”