As crypto contagion spreads, Coinbase will lay off approximately 950 staff
Coinbase Global Inc (COIN.O) announced on Tuesday that it will lay off around 950 employees, or 20% of its workforce, as part of a reorganisation plan, the cryptocurrency exchange's third round of layoffs since last year.
The business, whose shares were up 3.3% at $39.52, said it anticipated restructuring costs of $149 million to $163 million.
"The entire sector is suffering through a crisis of trust and trading volume remains very weak. "This employment loss reflects the present tough climate," said Oppenheimer analyst Owen Lau.
Rising interest rates and fears of an economic slump took off more than a trillion dollars from the cryptocurrency market last year.
The biggest hit came in November, when cryptocurrency exchange FTX declared bankruptcy.
“We also saw the fallout from unscrupulous actors in the industry, and there could still be further contagion,” Coinbase Chief Executive Brian Armstrong said in a blog post on Tuesday.
“We will be shutting down several projects where we have a lower probability of success.”
Coinbase stated that it has no more comment on the scheme.
"This (job reduction) can help with near-term operating leverage," Mizuho analyst Ryan Coyne said, adding that it will not address the underlying issue of rapidly declining volumes.
“It is going to require much more significant cost cutting to accommodate the current volume run rate.”
The crypto sector's difficulties have persisted this year, with falling deposits, layoffs, and several legal stumbling blocks.
Coinbase slashed more than 60 jobs in its recruiting and institutional onboarding teams in November, after cutting 1,100 workers, or 18% of its workforce, in June.
Last year, the company's stock lost nearly 86% of its value.
By fLEXI tEAM