It looks like Coinbase – a popular digital currency exchange in North America – just can’t catch a break. After getting sued by customers and then having to engage in a settlement with the New York Attorney General’s office, the trading platform has announced it’s having to cut another 1,000 jobs to make ends meet.
Coinbase Forced to Part Ways with More Staff
The crypto space has been doing very poorly. Despite showing signs of early recovery (bitcoin is on the verge of hitting $18K again), the world’s primary digital currencies are still in rough stages, and exchanges like Coinbase are being hit hard. Trouble initially began in the middle of 2022 when Coinbase announced it was letting go of approximately 18 percent of its staff.
The move was to help cope with a lack of liquidity and the volatility that the space had been experiencing for several months up to that point. It’s a shame because 2022 was supposed to be the year of hiring, one in which companies like Coinbase expanded their staff numbers by three times what they were… At least that was the goal.
Unfortunately, the company had to put a hiring freeze in place and then outright engage in the letting go of employees to deal with the ailing industry. Now, it looks like Coinbase is being hit even harder, and another 1,000 people are likely to be treading the job boards very soon.
In a recent interview, Brian Armstrong – the CEO of the company – explained:
As we examined our 2023 scenarios, it became clear that we would need to reduce expenses to increase our chances of doing well in every scenario. While it is always painful to part ways with our fellow colleagues, there was no way to reduce our expenses significantly enough without considering changes to headcount.
Right now, Coinbase is concerned about two things. First, the “contagion” as Armstrong puts it in his interview being caused by the collapse of the now fallen digital currency exchange FTX, which has caused countless ripples in the space. Armstrong doesn’t think the fear and terror caused by FTX is anywhere near being over.
Second, he says Coinbase has often concentrated on having a large staff in the past as a “metric for success.” Clearly, with the conditions of the market preventing further hires, this can no longer be a determining factor.
The Company Can Still Do Well
Despite this rough patch, Wall Street issued a report claiming it expects the company to flourish this year. The document read:
We believe [Coinbase] is well positioned to likely survive and succeed in a tough neighborhood, where the relevance of most of its peers/competitors seems to be diminishing. Today’s announcement essentially adjusts the company’s existing cost base to significantly lower trading volumes, protecting the company’s $5 [billion] cash base.