Major crypto exchange Coinbase said it will reduce its workforce by around 18% in order to cut expenses and increase efficiency ahead of a possible recession.
According to the report submitted to the US Securities and Exchange Commission, on June 14 this year, Coinbase Global, Inc. announced “a restructuring plan to manage its operating expenses in response to current market conditions and ongoing business prioritization efforts.”
Per the company,
“The Plan involves a reduction of the Company’s workforce by approximately 1,100 employees, representing approximately 18% of the Company’s global workforce as of June 10, 2022, following which the Company expects to have approximately 5,000 total employees as of the end of its current fiscal quarter on June 30, 2022.”
Per Coinbase CEO Brian Armstrong’s announcement, the executive team has reached several conclusions: that the economic conditions are changing rapidly and we seem to be entering a recession; managing costs is critical in down markets; and the company grew too quickly.
Therefore, said he, they reached two decisions as well: the need to manage expenses, and the need to increase efficiency.
The employees would be getting an email telling them that they’ve been fired within an hour from the announcement’s publication. They’d be “departing today” with a minimum of 14 weeks of severance plus an additional 2 weeks for every year of employment beyond 1 year, 4 months of health insurance in the US, 4 months of mental health support, and access to Talent Hub to help them search for new employment.
Coinbase added in the SEC report that they expect the plan’s “execution” to be “substantially complete” already in this second quarter – out of which only half of the month is left.
Therefore, the exchange estimates that it will incur some USD 40m-USD 45m in “total restructuring expenses,” which they say are “future cash-based expenditures” and are related to employee severance and other termination benefits.
Coinbase noted that they are not updating the outlook provided in a letter to its shareholders back in May, but that as a result of this plan,
“The Company expects that the previously provided outlook for the Company’s technology and development and general and administrative expenses for full year 2022 to be closer to the lower end of the range included in the Shareholder Letter.”
As reported in May, in reaction to the bearish market, the exchange has vowed to modify its earlier expansion plans for this year with regard to creating new jobs. Subsequently, some recruits voiced their disappointment over rescinded job offers.
Furthermore, Armstrong just recently responded to an online petition allegedly coming from one or more Coinbase workers calling out the management team for numerous mistakes and demanding exits of some of the executives. The CEO, however, urged the anonymous petitioners to “quit and find a company to work at that you believe in,” and later added that “if you get caught you will be fired.”
Meanwhile, crypto lender BlockFi CEO Zac Prince announced on Monday that “after taking significant time to plan and consider, we are reducing our headcount by roughly 20%.”
At the end of 2020, per the CEO, the company had about 150 employees and since then grew to over 850.
Having been affected by the changes in the macroeconomic conditions, the company had to make choices to manage costs, Prince said.