The largest cryptocurrency exchange has laid off nearly a fifth of its staff via a cheeky email from its CEO, in the latest grim sign for the market.
Coinbase has announced it will lay off 18 percent of its workforce, warning of an impending recession and “crypto winter” as the market continues a major crash that wiped out trillions of dollars in the value of bitcoin and other digital currencies.
The largest US-based exchange blamed too rapid expansion and tight economic conditions for the need to cut about 1,100 positions, with co-founder and CEO Brian Armstrong announcing the “tough decision” in an email to staff. on Tuesday†
“We seem to be entering a recession after an economic boom of more than 10 years,” he wrote.
“A recession could lead to another crypto winter and could last for an extended period of time. Over the past crypto winters, trading earnings (our biggest source of income) have dropped significantly. While it is difficult to predict the economy or the markets, we always plan for the worst so we can run the business in any environment.”
It came as bitcoin fell below USD 21,000 ($A30,445) – close to levels last seen in December 2020 and nearly 70 percent lower than its all-time high in November 2021 of $US67,802 ($A98). .299) – as the broader cryptocurrency market fell below $US1 trillion ($A1.45 trillion), down from $US3 trillion ($A4.35 trillion) at its peak, according to to Coinmarketcap†
Crypto Prices Have Been Falling Since November, But The Correction Turned Into A Defeat Last Month With the collapse of the terra “stablecoin”, which was to be pegged to the US dollar, and its sister token luna.
The sales panic resumed again this week when one of the largest crypto lending platforms, based in the UK, Celsius networktold users Sunday night it was suspending all withdrawals, swaps and transfers between accounts due to “extreme market conditions”.
As the price of bitcoin crashed, Binance, the world’s largest crypto exchange by trading volume, added fuel to the fire on Monday when it launched a temporary freeze about withdrawals “because of a blown transaction”.
The brutal sell-off in the cryptocurrency market comes as central banks begin aggressively raising interest rates to combat skyrocketing inflationcausing investors to withdraw from riskier assets and the stock markets to collapse.
Coinbase had already warned in mid-May that the number of active users was declining. The group posted a net loss of $430 million ($A623 million) in the first quarter of 2022.
Mr. Armstrong told staff “controlling our costs is critical in down markets” and noted that the company “survived four major crypto winters”, but admitted that this time “we grew too fast”.
Coinbase went from 1,250 employees in early 2021 to about 6,200 today.
“At the time, we were in the early innings of the bull run and crypto product adoption exploded,” he said.
“There were new use cases made possible by crypto gaining traction practically every week. We saw the opportunities, but we had to massively scale our team to be positioned to compete in a wide variety of bets. While we did our best to get this just right, it’s clear to me now that we hired too much.”
Mr. Armstrong said each employee would receive an email from HR “within an hour” informing them if they would be fired.
“If you are affected, you will receive this notification in your personal email as we have made the decision to end access to Coinbase systems for affected employees,” he wrote.
“I realize that removing access will feel sudden and unexpected, and this is not the experience I wanted for you. Unfortunately, given the number of employees who have access to sensitive customer information, the only practical choice was to ensure that no person made a hasty decision that harmed the company or themselves.”
He added that affected employees will receive a minimum of 14 weeks of severance pay plus two weeks for each year of service.
They also receive four months of health insurance in the US and four months of mental health care worldwide.
Ironically, the mass layoffs come days after Mr. Armstrong publicly urged his own employees to quit after they circulated a petition calling for senior executives to be removed in order to revive Coinbase.
Below the complaints from employees were “aggressively hiring for thousands of roles, despite the fact that it is an untenable plan and contrary to the wisdom of the crypto industry”.
“This is really stupid on multiple levels,” Mr. Armstrong wrote on Twitter in response to the petition. “If you don’t trust the directors or CEO of a company, why do you work for that company? Stop it and find a company to update that you believe in!”
In announcing the layoffs, Coinbase did not change its forecasts for the year, but warned that results would likely be at the lower end of its forecast range.
The NASDAQ-listed company, currently valued at $11.45 billion ($A16.6 billion), has seen its share price fall 80 percent since its debut last April at $250 ($A362).
Coinbase shares fell less than 1 percent, closing at $51.58 ($A74.78) Tuesday.
– with AFP
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