Coinbase is looking to initiate its second round of layoffs, according to an official blog post by co-founder Brian Armstrong. This comes months after the world’s leading crypto exchange laid off 18% of its workers amidst a trying time for the volatile cryptocurrency market and tumbling prices of cryptocurrencies.
In the latest round of layoffs, the crypto exchange is looking to navigate the tough market conditions by shaving off about 950 employees, which amounts to around 20% of its current workforce. To add to this, it is looking to reduce its operating expenses by nearly 25% quarter-on-quarter (Q/Q) to ensure that it has “the appropriate operational efficiency to weather downturns in the crypto market, and capture opportunities that may emerge.”
If this is not enough, the crypto platform is looking to further reduce its expenses by shutting down a multitude of projects – ones with “a lower probability of success.” It will communicate with the affected teams on Tuesday, while its other projects will resume operations as usual.
As of September 2022, Coinbase had around 4700 employees, and now the crypto exchange believes that there is no way to bring about a significant reduction in its expenses without trimming its workforce. The affected employees will receive an email to their personal account today, along with invitation to meet with an HRBP and senior leader.
The impacted employees will not leave the company empty-handed – Armstrong wrote that Coinbase will provide them with a generous severance package. Its US-based employees will receive a minimum of 14 weeks base pay (2 additional weeks per year worked), along with health insurance, and other benefits. For employees who are currently on a work visa, the company will provide further transitional support, while similar support will be extended to Coinbase employees working overseas – which is “in line with the employment laws” of their countries.
Furthermore, Coinbase will provide access to its Talent Hub to help them in their search for their future careers. These efforts are not going to be cheap for Coinbase – it disclosed in a 8K filing with the SEC that it estimates its total restructuring expenses to range between $149-163 million. To add to this, it expects to incur $58-68 million in cash charges related to employee severance and other termination benefits, along with its adjusted EBIDTA losses for the year ending December 31 to be within “the negative $500 million loss guardrail.”
“Dark times also weed out bad companies, as we’re seeing right now. But those of us who believe in crypto will keep building great products and increasing economic freedom in the world. Better days are ahead, and when they arrive, we’ll be ready. Thank you for everything you’ve done to get us this far, and everything you will do to carry us forward,” Armstrong said.