- Coinbase will slash its workforce by 20%, its CEO Brian Armstrong said Tuesday.
- It's the crypto exchange's second round of big job cuts after it chopped 18% of staff in June.
Coinbase will chop 20% of its workforce in a cost-cutting effort to help the exchange weather the troubles roiling the crypto market, its CEO Brian Armstrong said Tuesday.
The crypto exchange plans to slash 950 jobs in a bid to reduce its operating expenses by 25%, he said in a blog post.
Armstrong appeared to allude to disgraced FTX founder Sam Bankman-Fried — who pleaded not guilty to eight criminal charges this month — in his post on the job cuts and the headwinds facing the crypto sector.
"In 2022, the crypto market trended downwards along with the broader macroeconomy," he said. "We also saw the fallout from unscrupulous actors in the industry, and there could still be further contagion."
"Therefore, I've made the difficult decision to reduce our operating expense by about 25% quarter-on-quarter, which includes letting go of about 950 people," Armstrong added.
It's the second round of big job cuts within months at the crypto giant after it reduced headcount by 1,100 employees — 18% of its workforce at the time – in June last year . It had 4,700 employees as of September.
"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.
Coinbase shares rallied 4.6% at Tuesday's opening bell on news of the job cuts, trading at $40.03 at last check.
The stock has plummeted 83% over the last 12 months as crypto suffers a broad and deep selloff. The benchmark S&P 500 index has fallen 17% over the same period.
Rising interest rates and the collapse of major firms like FTX have rattled the crypto sector over the past year. The price of bitcoin — the largest token by market capitalization — has fallen 59% since the start of 2022.
US prosecutors are investigating FTX over allegations its former CEO Bankman-Fried used customer funds to prop up its sister trading firm Alameda Research, with around $8 billion missing. FTX's collapse has also spread troubles across crypto as it defaulted on repaying loans to the now-bankrupt lender BlockFi and undermined investors' faith in centralized exchanges.
Coinbase decided to slash the 950 jobs as part of an annual planning process where it modeled bull, bear, and base case crypto market scenarios, according to Armstrong.
"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," he said.
"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."
The job cuts are part of a restructuring plan that Coinbase expects to complete by the end of June 2023.
In a Securities and Exchange Commission filing published Tuesday, the exchange forecast that the restructuring will cost between $149 million and $163 million, including paying out between $58 million and $68 million in severance pay.
Other crypto firms such as DCG's Genesis and major exchange Kraken have also cut their workforce in a bid to save money, as the spectacular implosion of FTX continues to rock the sector.
This story has been updated to include further details of Coinbase's plan.