Coinbase cuts 20% jobs, abandons ‘multiple’ projects to weather crypto market downturn – businessroundups.org

Coinbase plans to cut 950 jobs, or about 20% of its workforce, and shut down “several” projects as the US crypto exchange giant looks to cut its spending to increase its “opportunities to do well in any scenario”.

This is the second round of major layoffs at the crypto exchange, which eliminated 18% of its workforce or nearly 1,100 jobs last June, but there was “no way to reduce our spending significantly enough without accounting for changes in the workforce”, co. founder and CEO Brian Armstrong wrote in a blog post Tuesday.

The measures are part of the company’s efforts to reduce operating expenses by about 25% quarter over quarter, he said. The company estimates it will incur approximately $149 million to $163 million in total restructuring costs, consisting of approximately $58 million to $68 million in out-of-pocket costs related to termination benefits and other termination benefits. revealed (PDF) in an 8K filing with SEC Tuesday.

In the filing, Coinbase also disclosed that it expects its adjusted EBIDTA losses for the year ended December 31, 2022 to fall within “the $500 million negative guardrail” it set last year.

As with companies in other industries, crypto companies are aggressively making key decisions to survive the downturn in the broader market, which has reversed much of the gains from the 13-year bull run. Kraken said in November it plans to lay off 1,100 people, or 30% of its workforce.

Armstrong said the crypto industry is reeling from the fallout from “unscrupulous actors,” likely referring to Sam Bankman-Fried, the founder of the collapsed crypto exchange FTX (which stole billions of dollars in client funds), and disgraced crypto hedge fund Three Arrows Capital founders Kyle Davies and Su Zhu, warning that “there may be further contagion”.

“As we examined our 2023 scenarios, it became clear that we needed to reduce our spending to increase our chances of doing well in each scenario. While it is always painful to say goodbye to our colleagues, there was no way we could reduce our expenses significantly enough without factoring in workforce changes,” he wrote.

“Dark times also wipe out bad companies, as we are seeing now. But those of us who believe in crypto will continue to build great products and increase economic freedom in the world. Better days are coming, and when they come, we’ll be ready. Thank you for all you have done to get us this far and all you will do to help us move forward.”

Shares of Coinbase rose 15% on the news to $38.2 each. It’s still down 83% over the last year.

Armstrong did not specify which projects the company plans to close, but said those projects had a “lower chance of success”.