Coinbase Has Announced Plans To Reduce Its Workforce by Almost 1,000 Employees

Reuters reported that Coinbase, a cryptocurrency exchange, announced plans to cut around 20% of its workforce, or around 950 employees, as part of a restructuring initiative set to be completed by Q2 2023. This move comes in response to the ongoing downturn in the crypto market and is expected to cost between $149 million and $163 million, with $58 million to $68 million of that being for employee severance.

In a SEC filing from today, it is stated that:

“On January 10, 2023, the Company announced a further restructuring plan (the “Plan”) to manage its operating expenses in response to the ongoing market conditions impacting the cryptoeconomy, as well as ongoing business prioritization efforts. The Plan involves a reduction of the Company’s workforce by approximately 950 employees. The Company expects execution of the Plan to be substantially complete by the second quarter of 2023.

In connection with these actions, the Company estimates that it will incur approximately $149 million to $163 million in total restructuring expenses, consisting of approximately $58 million to $68 million in cash charges related to employee severance and other termination benefits. Of the aggregate charges that the Company expects to incur in connection with the Plan, the Company expects that approximately $91 million to $95 million will be in stock-based compensation expenditures relating to the acceleration of the vesting of outstanding equity awards in accordance with the terms of such awards. The Company expects to recognize substantially all of these charges in the first quarter of 2023.

The estimates of the charges and expenditures that the Company expects to incur in connection with the Plan, and the timing thereof, are subject to a number of assumptions, including local law and consultation requirements in various jurisdictions, and actual amounts may differ materially from estimates. The Company may also incur charges and expenditures not currently contemplated due to unanticipated events that may occur in connection with the Plan.”

Source: https://www.sec.gov/Archives/edgar/data/1679788/000167978823000003/coin-20230110.htm

This is not the first time Coinbase had to cut jobs due to the bear market, having already begun layoffs in June 2020, and the CEO Brian Armstrong having previously noted the company grew too quickly during the bull market.

Coinbase, the cryptocurrency exchange, has announced a significant reduction of its workforce, with plans to cut 18% of its employees, or 1,100 jobs. This decision comes as part of a restructuring initiative in response to the ongoing market conditions in the crypto economy, and will also include shutting down several projects with a “lower probability of success.” 

The CEO, Brian Armstrong, has stated that this decision was made after conducting stress tests on the company’s annual revenue, and that reducing expenses through headcount reduction was necessary to increase chances of success in any scenario. The cost of this move is estimated to be $149 million – $163 million, including cash charges for employee severance.

This news follows the loss of an additional 60 jobs in November, with the total job loss in the crypto industry estimated at 27,000 since April 2020. COIN stock has risen 4% in pre-market trading following the announcement.