In a letter to employees, Coinbase CEO Brian Armstrong blamed the “cryptocurrency winter” on changing economic conditions. The company said it would incur $40 million to $45 million in restructuring costs in the next few months bitcoin-consistency.com, roughly double the annual amount it had spent on headcount. However, the move will leave many employees stranded with little to no income. As a result, Coinbase’s stock price has tumbled 80% this year.
The cryptocurrency exchange Coinbase has announced plans to ax more than a hundred employees, or 18% of its workforce. This comes as the cryptocurrency market has been hit by intense volatility. Investors have been fleeing risky assets such as Bitcoin amid fears of higher inflation, which could force the U.S. Federal Reserve to raise interest rates, potentially tipping the economy into a recession.
Coinbase Fired Employees
The news has sparked a wave of resignations and a massive loss of investor confidence. The company initially said the hiring freeze would only last a few months but announced it would continue for the foreseeable future. It had earlier planned to add 2,000 new jobs to its workforce. As a result, the company’s stock has been hit hard this year; since its IPO in April, it has plunged over seventy percent, or 85%, from its all-time high. And bitcoin has lost over five percent of its value this year, to about $22,000, or just under $5,000.
The cutbacks are not just occurring at Coinbase. BlockFi and Gemini have also recently announced layoffs. This latest round of cutbacks is part of a broader wave of tech company layoffs affecting companies from PayPal to Netflix. Klarna, Bolt, and PayPal have also reported massive layoffs, affecting more than 19,000 employees. However, the crypto market has been extremely volatile over the past year.
Laid-Off Employees Will Get At Least 14 Weeks Of Severance
This news comes as another blow to the company’s reputation. It spent $14 million on a Super Bowl advertisement that featured a colorful QR code. It directed viewers to a website where they could get $15 in Bitcoin. Coinbase plans to eliminate up to 1100 jobs and restructure its operations by the end of the current quarter on June 30.
The company expects to incur $40-45 million in restructuring costs. Earlier this month, the San Francisco-based company warned that falling cryptocurrency prices “directly impacted” its first-quarter financial results, which led to a loss for the company. Its stock has declined by more than 85%, while its employees have been encouraged to find alternative work.
The layoffs will affect all employees, but those affected by the decision will receive a courtesy email from HR. The company is attempting to safeguard sensitive customer data by cutting its workforce, which is the first step in the process.
The company will offer affected employees a minimum of 14 weeks of severance, plus two additional weeks for every year of employment. In addition, affected employees in the U.S. will receive four months of COBRA health benefits, and global employees will receive mental health support.
The news comes amid a cryptocurrency winter when the prices of Bitcoin and other cryptocurrencies are falling. However, a Grayscale Investments study last year revealed that more than half of bitcoin owners plan to keep their currency in the future.
The Coinbase announcement comes as stocks in the cryptocurrency industry fell more than 80% this year. In response to the downturn, the company also halted hiring and rescinded offers to its employees.
The Company Will Incur $40 Million To $45 Million In Restructuring Expenses
Cryptocurrency exchange Coinbase is laying off more than one hundred employees to cut costs. The company announced a hiring freeze earlier this month, then canceled the plan to triple its staff. Some employees had given up other jobs or relied on Coinbase for sponsoring their visas.
The layoffs are a result of falling crypto prices. Although there are many reasons for Coinbase’s decision to lay off employees, one main reason is that it’s an excellent time to consider diversifying your portfolio.
Cryptocurrency stocks are falling, and Coinbase is no exception. Bitcoin, the primary metric of the crypto space, has fallen more than 50% this year. With the price of Bitcoin down over 50% this year, it’s no surprise that the crypto industry is facing problems. However, cryptocurrency still has a long way to go, and you should invest in it using bitcoin trading software.
Likewise, it is no secret that cryptocurrency prices are volatile and that Coinbase is now laying off almost one-fifth of its workforce. But, the recent layoffs show how tough it is to survive in cryptocurrency.
Also, you can check: The list Of The Best Cryptocurrency To Invest