Coinbase chief Brian Armstrong has hinted that the spectacular implosion of Sam Bankman-Fried’s rival exchange FTX last year proves that his company has chosen the right strategy for long-term success. However, despite this foresight, the company has announced that it’s set to fire nearly 1,000 employees.
Armstrong broke the news early Tuesday in a message to Coinbase’s employees.
“Coinbase is well capitalized, and crypto isn’t going anywhere. In fact, I believe recent events will ultimately end up benefiting Coinbase greatly (a large competitor failing, emerging regulatory clarity, etc.), and they validate our long-term strategy,” wrote Armstrong.
However, he then went on to say, “But it will take time for these changes to come to fruition… Therefore, I’ve made the difficult decision to reduce our operating expense by about 25% Q/Q, which includes letting go of about 950 people.”
The affected employees were immediately locked out of the Coinbase system and invited to meet with the company’s HR department.
Armstrong says that the cuts are due to the company’s annual planning process which runs various revenue-based calculations. In Armstrong’s words, Coinbase needs to “reduce expenses to increase our chances of doing well in every scenario.”
According to the Coinbase CEO, the reduction in workforce will be carried out alongside the firm killing off a number of projects that “have a lower probability of success.” Other projects will operate as normal but with smaller teams.
Staff cuts are becoming a crypto trend
Coinbase previously cut 18% of its workforce in June blaming the company’s rapid growth during the last bull market.
Now it seems that the exchange is being forced to reckon with the repercussions of the recent crypto winter that has seen a number of the space’s biggest players first to scale back.
Indeed, Huobi recently revealed that it’s set to slash its workforce by 20% amid rumors of insolvency, and last week, Barry Silbert’s Genesis cut 30% of its workforce in what was the firm’s second round of layoffs in under six months.
And last November, Kraken blamed “macroeconomic and geopolitical factors” for it needing to shed 1,100 workers from its payroll.