Coinbase lays off 18% of employees (about 1,100 people) amid increasing “cryptowinter”
On June 14, Coinbase Global Inc., the largest cryptocurrency exchange in the United States reported that it is preparing to lay off 18% of employees, ie about 1,100 of the 6,100 people who worked in the company. The CEO explained the need to reduce staff by deteriorating the cryptocurrency market – it lost $1 trillion in capitalism in the last two months and rolled back to early 2021, when the market capitalization of cryptocurrencies was less than $1 trillion.
Significantly, just four months ago, Coinbase spent $14 million on Super Bowl advertising, which consisted almost entirely of a colorful QR code that jumped on the screen and encouraged viewers to go to a website where they could get $15 in bitcoins to sign up.
And in about four months, Coinbase’s management, which recently began rejecting candidates who passed the interview and received a formal offer (Yesterday’s Motherboard publication was about 300 people who were turned down after they accepted the job offer) to strict “cryptowinter”.
Coinbase CEO Brian Armstrong in an official statement posted on the company’s blog complained about changing economic conditions that could lead to “cryptocurrencies”, and then, reaching the third point, recalled that the company “overdid it”, justifying the attempt to take advantage “New usage scenarios that appear every week due to the rapid growth of the cryptocurrency market.” But it did not happen as expected.
2/ We also grew quite quickly over the past two years and have begun to operate less efficiently at our new size. It will take us some time to adjust to this new scale before growing again.
— Brian Armstrong – barmstrong.eth (@brian_armstrong) June 14, 2022
Everyone will receive an electronic “letter of happiness” from the personnel department, from which they will find out whether their position should be reduced. Those released will receive at least 14 weeks of severance pay plus an additional two weeks for each year after the first year, plus four months of COBRA health insurance in the United States and four months of mental health support worldwide, as well as access to its talent center who should try to help them find a new job.
Four days ago, Armstrong became embroiled in a Twitter scandal when he called a staff petition calling for the dismissal of Coinbase executives “really stupid on several levels” and called on disgruntled employees to offer options and seek solutions with the team or resign.
The petition touches on a number of problematic aspects that do not seem as absurd as Armstrong described – in particular, its authors criticize the leadership for its policy of “aggressively hiring thousands of roles against the logic of the crypto industry and despite the viability of the plan.” The document did not mention advertising for the Super Bowl, but mentioned over-prioritization of certain projects, including the Coinbase NFT platform – the management did not choose the best moment, given the decline in market activity and fading interest in the idea of trading digital tokens.
In May, The Wall Street Journal reported that Coinbase executives, including Armstrong, co-founder Fred Ersham, President and Chief Operating Officer Emily Choi, and Chief Executive Officer Surojit Chatterjee, received $1.2 billion from the sale of shares after the April 2021 IPO. The stock opened at $382 and is now trading at around $52. An April article in the New York Times reported that employees are leaving technology companies in a hurry for crypto startups in the wake of rapid enrichment, citing Chatterjee’s example, just 14 months after he left Google and joined Coinbase, his stake in the company already cost (at that time) over $600 million.
Other cryptocurrency firms, such as BlockFi, Crypto.com and Gemini, also recently announced staff cuts – after bitcoin and the entire cryptocurrency market went downhill. It will be recalled that the world’s most popular cryptocurrency has been depreciating for 12 weeks in a row and has already lost about 70% of its maximum of $69,000 – that’s how much cryptocurrency was worth at the end of 2021.
