Coinbase is laying off 950 workers — roughly one-fifth of its workforce — as the crypto industry struggles to keep its footing.
Coinbase CEO Brian Armstrong told employees Tuesday that the company is suffering from a downturn in crypto values and the fallout from the collapse of crypto trading platform FTX, which had been backing numerous crypto companies.
“As we examined our 2023 scenarios, it became clear that we would need to reduce expenses to increase our chances of doing well in every scenario,” Armstrong wrote in a message to employees. “While it is always painful to part ways with our fellow colleagues, there was no way to reduce our expenses significantly enough, without considering changes to headcount.”
Armstrong said that Coinbase is shutting down “several projects where we have a lower probability of success” as part of an effort to slim down its operations. The company expects the layoffs to reduce costs by 25 percent over the next quarter.
It’s the second wave of layoffs for Coinbase, which cut 18 percent of its staff in June after crypto values took an initial plunge.
“We also reduced headcount last year as the market started to correct, and in hindsight, we could have cut further at that time,” Armstrong said.
Investors steadily pulled their money out of crypto in the second half of last year, gravitating away from risky bets amid rising interest rates. The crypto market cap sits at $848 billion, down from nearly $3 trillion at its peak in November 2021.
The FTX collapse — and ensuing indictments against its CEO Sam Bankman-Fried — has wrecked trust in the crypto industry and caused several crypto firms to go under.
Experts predict that more companies will go under this year. Armstrong said in his note that there “could still be further contagion” from decisions made by “unscrupulous actors in the industry.”