The CEO of Coinbase said Tuesday that he’s laying off more than 1,000 of the cryptocurrency exchange’s employees, warning of an impending recession and “crypto winter.”
The news comes as cryptocurrency markets tank, with bitcoin dipping below $ 21,000 late Monday – its lowest level since 2020. Smaller coins have fared even worse.
“We appear to be entering a recession after a 10+ year economic boom,” CEO Brian Armstrong said in a note to employees. “A recession could lead to another crypto winter, and could last for an extended period.”
Armstrong said Coinbase’s revenue had “declined significantly” during past crypto pullbacks and that the layoffs would help the company survive.
The company said roughly 1,100 employees were being axed in a Securities and Exchange Commission filing Tuesday, adding that it expects to “incur approximately $ 40 million to $ 45 million in total restructuring expenses” related to the layoffs.
The news comes weeks after Coinbase caught flak for rescinding job offers to would-be employees who had already accepted them.
Coinbase went public in April 2021 near the peak of the cryptocurrency market. Its shares were down 7.3% in pre-market trading on Tuesday and have plummeted 80% so far in 2022.
In Tuesday’s layoff note, Armstrong admitted to over-hiring during the recent crypto boom.
“We grew too quickly,” the CEO said, noting that the firm had just 1,250 employees at the beginning of 2021. “While we tried our best to get this just right, in this case it is now clear to me that we over- hired. ”
Laid-off employees will get at least 14 weeks of severance, plus four months of health insurance and mental health benefits, Armstrong said.
Coinbase declined to comment beyond Armstrong’s email.
Other cryptocurrency firms have also hit the skids during the current market rout. Crypto.com and BlockFi, two other crypto trading sites, have laid off hundreds of employees over the past several days. Gemini, another crypto site controlled by the Winklevoss twins, made layoffs earlier in June.
All four crypto exchanges have blamed the layoffs on broader issues in the economy.
Investors expect the Federal Reserve to drastically hike interest rates and are therefore pulling back from risky investments like cryptocurrencies and fundraising rounds for unprofitable startups.