First came the market collapse. Now come the layoffs.
When Coinbase announced it was laying off almost a fifth of its staff, or 1,100 employees, on Tuesday it was clear a tough period for the young cryptocurrency industry is about to get a whole lot tougher.
1,200 New Employees
The exchange giant went public with great fanfare in April 2021 and rapidly became a symbol of the crypto’s breakthrough into mainstream investing. As its market capitalization approached $100B last spring, Coinbase heralded a new era when Bitcoin, Ethereum and other digital assets would find a place in the diversified portfolios of ordinary investors.
And it hired like mad, loading LinkedIn and other employment sites with Help Wanted notices, and bringing aboard 1,200 new employees in the first quarter of this year alone.
Now, with a savage bear market taking hold and yet another big platform, Celsius, wobbling, Coinbase CEO Brian Armstrong is retrenching. Coinbase’s share price has plunged 84% in the last 12 months. In a blog posted to Coinbase’s website, he said the layoffs were needed to manage costs and brace for a potential recession.
Such sobering news signals a new phase in the crypto industry’s development. “Things are definitely slowing down and projects are taking much longer to build and deliver,” said Graeme Fearon, an Australia-based lawyer with Moulis Legal, who represents digital asset firms. “Despite what ardent extremists would like to believe, crypto is turning out to be as susceptible to economic cycles as any other sector.”
Coinbase isn’t the only platform downsizing. On June 13, BlockFi, a centralized crypto interest and trading venue, said it would lay off 20% of its employees. Like so many industry players, BlockFi also rapidly ramped up during the bull market, with its headcount increasing to 850 from 150 since the end of 2020.
Other exchanges that have announced layoffs this month include Gemini, the Winklevoss-backed exchange and custodian, which will downsize its workforce by 10%, and Crypto.com — which is culling 260 or 5% of employees.
In May, Latin American exchange Buenbit cut 80 people or 45% of workers, with regional rival Bitso also laying off 80 of its 700 employees. Derivatives exchange BitMEX laid off a quarter of its staff in April, and Robinhood, a brokerage firm supporting digital assets, fired 9% of its full-time roster that same month.
At Coinbase, affected employees were immediately cut off from Coinbase’s internal systems including email to protect against security violations., according to the firm’s blog post. They will receive 14 weeks of severance with additional pay going to employees with tenure of more than one year. The move came after Coinbase rescinded job offers to 180 prospective employees in early June.
While this is shaping up to be a cruel summer in the northern hemisphere, it’s important to keep in mind that this is a cycle, and bear markets do eventually give way to bullish periods.
“I reckon in a year’s time or so, they’ll be crying out for all that talent they’re letting go now,” Fearon said.
That’s the hope, anyways.