The largest cryptocurrency exchange has fired nearly a fifth of its staff via a brutal email from the CEO, in the latest sad signal to the market.
Coinbase has announced it will lay off 18 percent of its staff, warning of an impending recession and a “crypto winter” as the market continues a major downturn that has wiped out billions of dollars in the value of bitcoin and other digital currencies.
The largest stock exchange based in the United States blamed the rapid expansion and the difficult economic conditions of the need to cut about 1,100 positions, and co-founder and CEO Brian Armstrong announced the “difficult decision” in an email electronic to staff Tuesday.
“It looks like we are entering a recession after an economic boom of more than 10 years,” he wrote.
“A recession could lead to another cryptocurrency winter and could last for a long time. In recent cryptocurrency winters, business revenue (our largest source of revenue) has declined significantly. Although it is difficult to predict the economy or markets, we always plan the worst to be able to operate the business in any environment. “
It came when bitcoin fell below $ 21,000 ($ 30,445), close to the levels last seen in December 2020 and nearly 70% below its November 2021 all-time high of 67,802. dollars ($ 98,299). – while the broader cryptocurrency market fell below $ 1 trillion ($ 1.45 trillion), below $ 3 trillion ($ 4.35 trillion) at its peak, according to Coinmarketcap.
Cryptocurrency prices have been falling since November, but the correction turned into a fall last month with the collapse of the “stablecoin” land, which was supposed to be pegged to the US dollar, and its German token moon.
Sales panic resumed this week when one of the largest cryptocurrency lending platforms, Celsius Network, based in the UK, told users on Sunday night that it was suspending all withdrawals, exchanges and transfers between accounts due to of “extreme market conditions”.
As the price of bitcoin crashed, Binance, the world’s largest cryptocurrency exchange by trading volume, added fuel to the fire on Monday when it announced a temporary freeze on withdrawals “due to a collateral transaction.” located “.
Brutal selling in the cryptocurrency market comes as central banks begin to aggressively raise interest rates to combat rising inflation, forcing investors to withdraw from riskier assets and causing stock markets to fall. .
Coinbase had already warned in mid-May that its number of active users was declining. The group reported a net loss of $ 430 million ($ 623 million) in the first quarter of 2022.
Armstrong told staff that “managing our costs is critical in declining markets” and noted that the company had “survived four major cryptographic winters”, but acknowledged that this time “we have grown too fast”.
Coinbase went from 1250 employees in early 2021 to about 6200 today.
“At the time, we were in the early stages of the run and the adoption of cryptographic products was exploding,” he said.
“There were new use cases triggered by cryptography that got traction almost every week. We saw opportunities, but we needed to massively scale our team to be able to compete in a wide range of bets. Although we did our best possible to do well, in which case I am now clear that we hired too much. “
Armstrong said all employees would receive an HR email “in the next hour” to let them know if they let them go.
“If you are affected, you will receive this notification in your personal email, because we made the decision to cut off access to Coinbase systems to affected employees,” he wrote.
“I realize that deleting access will be sudden and unexpected, and this is not the experience I wanted for you. Given the number of employees who have access to confidential customer information, unfortunately it was the The only practical option is to make sure that not a single person makes a hasty decision that would harm the company or themselves.
He added that affected employees will receive a minimum of 14 weeks of dismissal plus two weeks for each year of employment.
They will also receive four months of health insurance coverage in the US and four months of mental health support worldwide.
Ironically, the mass layoffs come days after Armstrong publicly urged his own employees to resign after circulating a petition calling for senior executives to be removed to “revive” Coinbase.
Employee complaints included “aggressive hiring for thousands of roles, despite being an unsustainable plan and contrary to the wisdom of the cryptographic industry.”
“This is really stupid on several levels,” Armstrong wrote on Twitter in response to the request. “If you don’t trust the executives or CEO of a company, why do you work for that company? Leave it and find a company to work for that you believe in!”
When announcing the layoffs, Coinbase did not change its forecast for the year, but warned that its results would likely be at the bottom of the forecast range.
The NASDAQ-listed company, currently valued at $ 11.44 billion ($ 16.6 billion), has seen its stock price fall 80 percent since its debut in April last year at $ 250 ( $ 362).
Coinbase shares fell less than 1% to close on Tuesday at $ 51.58 ($ 74.78).
frank.chung@news.com.au
– with AFP
Read related topics: Cryptocurrency