Cryptocurrency trading platform Coinbase Global COIN announced a restructuring plan and the expectation for job cuts Tuesday morning, sending shares lower. Here are the details.
What Happened: Coinbase announced a restructuring plan to help control operating expenses in response to current market conditions.
The company will reduce its workforce by around 1,100 employees, or around 18% of its current global workforce. Coinbase expects to have around 5,000 total employees at the end of the current quarter, ending June 30, 2022.
The restructuring efforts are expected to cost $40 million to $45 million in the second quarter related to severance and termination benefits. The costs will be realized in the second quarter.
All employees who are leaving the company will receive a minimum of 14 weeks of severance pay, plus an additional two weeks for every year of employment at Coinbase beyond one year. Employees leaving will also receive access to job openings at companies in the Coinbase Ventures portfolio.
Why It’s Important: The job cuts by Coinbase come as other cryptocurrency trading platforms have announced reductions to their workforces and also as the cryptocurrency market is seeing losses and heavy outflows.
“Today I am making the difficult decision to reduce the size of our team by about 18%, to ensure we stay healthy during this economic downturn,” Coinbase CEO Brian Armstrong said.
Armstrong cited current economic conditions, expectations to manage costs and growing too quickly as reasons for the job cuts.
“In past crypto winters, trading revenue (our largest revenue source) has declined significantly. While it’s hard to predict the economy or the markets, we always plan for the worst so we can operate the business through any environment.”
Armstrong thanked employees in a letter and said he hopes to be able to hire everyone back in the future.
“We would not be where we are today without your hard work and dedication to our mission.”
Price Action: Coinbase shares are down 6% to $48.88 in premarket trading Tuesday morning. Shares closed down 11% to $52.01 on Monday.
Photo: Courtesy of Marco Verch Professional Photographer on Flickr
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