Coinbase, one of the world’s largest cryptocurrency exchanges, will reduce its team size by about 18% to ensure the company stays healthy “during this economic downturn”, its chief executive officer (CEO) and co-founder, Brian Armstrong wrote in a blog post on Tuesday.
It was immediately unclear the exact number of employees that will be impacted by this decision. One of the likely triggers was the recent slump in cryptocurrencies — the global market cap recently shrunk below $1 trillion to $977 billion, around a 12% fall in a span of a few days. Currently, every top coin is roughly worth half or even less than its all-time highs.
CEO Armstrong pointed out three key reasons that led him to take this “difficult decision.” First were the current economic conditions. Next, he said this was Coinbase’s effort to cut costs in a down market. Lastly, the CEO admitted that Coinbase grew too quickly and that he over-hired, assuming that 2021’s rally would run longer.
“While we tried our best to get this just right, in this case, it is now clear to me that we over-hired. We appear to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter, and could last for an extended period,” his blog read.
Now, every employee will receive an email to let them know if they are “affected” or “unaffected”. The ones impacted will receive an email on their email IDs, not on their official ones, as they have been immediately cut off from Coinbase’s systems, the blog added.
Providing some relief, Coinbase assured that those sacked will receive severance pay that varies depending on how long an employee has been associated with the company. Further, they will also have access to health insurance in the United States, and some months of mental health support globally. Coinbase even promised to connect and help employees to find jobs within the company’s network.
The CEO concluded that hiring new talent had made the company less efficient not more and that the accountability of this decision fully rests with him.