Coinbase will cut 18% of its full-time positions as the cryptocurrency exchange is faced with a precipitous drop in both its stock price and the digital currencies it monitors, according to a CNBC report Tuesday (June 14) that cites an email sent to employees.
The staff reduction will mean Coinbase will lose about 1,100 of its almost 5,000 full-timers, the report says. Shares of Coinbase were down about 4.2% as of 11 a.m. Tuesday.
CEO Brian Armstrong pointed to a possible recession, and a need to manage Coinbase’s burn rate and increase efficiency as the reasons for the layoffs in his email to employees. He also said the company grew “too quickly” during a bull market, the report says.
“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,” said Armstrong in the email. Past so-called “crypto winters” have resulted in a significant decline in trading activity, he said.
“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,” said Armstrong.
Earlier this year, Coinbase said it planned to add 2,000 jobs across product, engineering and design, but it recently announced a pause in hiring then extended the freeze.
“Our employee costs are too high to effectively manage this uncertain market,” said Armstrong. “While we tried our best to get this just right, in this case it is now clear to me that we over-hired.”
Related: Bitcoin Plummet Triggers $1B in Margin Calls
The collapse of the cryptocurrency market had about $1 billion guaranteed by some 260,000 market investors liquidated due to margin calls in the past 24 hours, according to data from CoinGlass, the Wall Street Journal reported on Tuesday.
The crypto market has since lost 66% of its value since its November 2021, according to the report.
Bitcoin’s price was $22,514 as of 11:15 a.m. ET on Tuesday (June 14), about two-thirds of its $67,802.30 high in November 2021, according to Dow Jones Market Data. Bitcoin’s plummet since last November has added to about $2 trillion in losses in the overall market.
Crypto’s total market capitalization was roughly $975 billion on Monday (June 13) from a November high of close to $3 trillion, according to data from CoinMarketCap.
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