Yahoo Finance Coinbase to lay off 20% of workers in latest sign of crypto industry pain
Coinbase Global (COIN) said in an SEC filing Tuesday it would lay off approximately 20% of its staff, or around 950 employees, as part of larger cost-cutting measures amid continued turbulence in the cryptocurrency industry.
"In 2022, the crypto market trended downwards along with the broader macroeconomy," Coinbase CEO Brian Armstrong said in a blog post.
"We also saw the fallout from unscrupulous actors in the industry, and there could still be further contagion... In the face of increasingly challenging economic conditions, we made the difficult decision to further reduce the size of our teams to ensure we have the appropriate operational efficiency to weather downturns in the crypto market, and capture opportunities that may emerge."
With this third round of layoffs for the firm, the company has cut 2,110 workers since June 2022 and projects it will slash operating expenses by around 25% for the first quarter compared to Q4 of 2022. The company said it intends to complete the overall cost-cutting plan by the second quarter of this year.
Coinbase said it estimates it will pay between $149 million to $163 million in total restructuring costs. The company further broke that down into $58 million to $68 million in cash charges for employee severance and termination benefits, with $91 million to $95 million in expenditures being paid out as stock-based compensation.
Coinbase said in an SEC filing that following these cost cuts, "Adjusted EBITDA for the full year ended December 31, 2022 is expected to be within the negative $500 million loss guardrail that the Company provided in the Shareholder Letter."
The company hasn’t yet shared a date for when it will deliver its 2022 fourth-quarter earnings. As of the end of its third quarter for 2022, Coinbase held $5 billion in cash and cash equivalents.
By spot market trading volume, Coinbase is the second-largest crypto exchange and the largest of those regulated in the United States.
Coinbase shares rose as much as 8% in early trade on Tuesday following this news; the stock gained 15% on Monday.
Hit by shrinking investor appetite for risky assets, cryptocurrency prices plunged last year, leading to the collapse of some heavily leveraged investors. The impacts continue to ripple through the industry in the form of bankruptcies and layoffs.
Crypto firms cut almost 9,500 workers through 2022, according to an annual report from The Block Research. The figure included other major exchanges such as Crypto.com (2,260), Kraken (1,100), and Robinhood (1,060), as well as lenders Celsius (150) and BlockFi (250), the latter of which has also since filed for bankruptcy.
Based on data from layoffs.fyi compiled by The Block, the tech industry saw approximately 151,600 job cuts through 2022, with crypto cuts contributing to 6.2% of the total.
And the industry's job cuts appear far from over.
Last week, Asia-based crypto exchange Huobi confirmed that after laying off 300 employees last year, it planned to cut an additional 20% of its headcount moving forward. Cypto lender Genesis laid off 30% of its workforce, leaving 145 employees at the troubled firm after an additional 20% cut and the resignation of its CEO Michael Moro in August. The company has paused its loan business.
Digital Currency Group, parent company to Genesis, also said last week it would shutter its newer wealth management division by the end of the month.
Despite the continued fallout from crypto winter throughout the industry, Coinbase's Armstrong sounded an optimistic tone for the company's long-term horizon.
"Despite everything we have been through as a company and industry, the future is bright for both Coinbase and crypto," Armstrong said. "Coinbase remains well-capitalized and crypto isn't going anywhere — in fact, recent industry events will ultimately benefit Coinbase and crypto by weeding out the bad players and ushering in regulatory clarity."
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for Apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube
