Brian Armstrong, CEO of Coinbase, today announced his decision to cut the size of the company’s team by 18%. Each Coinbase employee was given a letter with information about whether they were laid off.
The bear market hits
According to Blog Post of Armstrong on Tuesday, the CEO explained that the recent macroeconomic downturn has forced his company to consider cutting its costs. “It looks like we are entering a recession after more than 10 years of economic boom,” he predicted.
Earlier this month data from the Atlanta Federal Reserve’s GDP tracker showed that the US could be on the verge of a recession, defined as two consecutive quarters of negative GDP growth. Meanwhile, the market is bracing for the further impact of the upcoming Federal Reserve rate hike that could come. faster than expected in response to rising inflation.
This pressure has prompted investors to abandon their positions in perceived “risk assets” such as tech stocks and cryptocurrencies. This is bad news for crypto-centric companies like Coinbase, who tend to work in tandem with the digital asset market. The company’s shares are currently trading at just $49.22, a record low.
Bitcoin is now down to a low not seen since December 2020. Given the circumstances, the CEO was forced to contend with the fact that his company hired too many employees during last year’s bull market. Based on Armstrong’s numbers, the exchange has tripled its membership from 1,250 to around 3,750 in 2021 and more than quadrupled in the last 18 months.
After analyzing the situation, management decided to prioritize cost management and efficiency improvements. Part of that effort will be laying off a significant number of employees, for many of whom the company does not currently have a “productive” use case.
“Adding new employees has made us less efficient, not more,” the CEO said. “We’ve seen significant slowdowns due to coordination issues and difficulty fully integrating new team members.”
Coinbase’s recent hiring cuts have already left many potential employees to fend for themselves who were previously offered jobs. canceled in recent notifications.
Mass layoff of cryptocurrencies
Coinbase is far from unique in its need to cut labor costs. BlockFi CEO Zack Prince announced yesterday that the lending platform will lay off 20% of its 850 employees, also citing macro conditions.
In addition, Crypto.com, Robinhood, and Gemini have announced plans for cuts in recent months of around 5%, 9%, and 10%, respectively.
The only cryptocurrency company that seems to be hiring more employees at the moment is Binance. CEO Changpeng Zhao claims that the exchange still has a “war chest” available for development funding during the crypto winter after saving money during the bull market.
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Credit : cryptopotato.com